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Bloomberg LP 731 Lexington Avenue Tel +1 212 318 2000 New York, NY 10022
February 7, 2018 Brent J. Fields Secretary U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Re: Motion to Stay the Effectiveness of CTA’s Fee Amendments
(SEC Release No. 34-82071; File No. SR-CTA/CQ-2017-04) Dear Mr. Fields,
Bloomberg L.P. writes to inform the Commission and interested parties of Bloomberg’s motion, filed yesterday, for a stay of the above-captioned fee amendment of the Consolidated Tape Association (“CTA”) national market system plan.
On November 14, 2017, CTA published a proposed amendment to the CTA/CQ plan that
would substantially broaden the applicability of CTA’s non-display and access fees for consolidated core market data. This was CTA’s second attempt to expand these fees, following its withdrawal of a similar amendment in May 2017 after numerous commenters opposed the amendment. See Exchange Act Release 34-80819 (May 31, 2017), 82 FR 26171 (June 6, 2017) (SR-CTA/CQ-2017-02), and related comments. The change would impose a large fee increase—exceeding 6,000% for many small and mid-size firms—by treating the Bloomberg “SAPI” display service as a data feed subject to non-display and access fees.
Bloomberg, SIFMA, and many other market participants filed comments in opposition to CTA’s November amendment.1 The comments noted the amendment’s tremendous financial harm, lack of cost-based justification for core-data fees, mischaracterization of Bloomberg’s SAPI display service, misclassification of display devices and data feeds, and anticompetitive targeting of a particular market-data service—as well as the urgent need for Commission review of the amendment under Exchange Act §11A and Reg. NMS Rule 608(b). On December 13, 2017, Bloomberg and SIFMA filed applications for review of CTA’s limitation of access under §11A.
In January 2018, however, the New York Stock Exchange—CTA’s administrator—
1 Commenters from the following institutions expressed opposition to the amendment: ACR Alpine Capital Research, Aleska Investment Group, AO Asset Management, Baird Equity Asset Management, Bloomberg, Bluefin Trading, Cantor Fitzgerald, Charles River Development, Duquesne Fund Services, Federated Investors, Garda Capital Partners, Global Endowment Management, Luminus Management, MacKay Shields, the Managed Funds Association, Masa Capital, SIFMA, TLP Trading, and TRPV Capital.
Bloomberg
sought a complete list of Bloomberg’s SAPI customers in order to enforce this fee increase. If Bloomberg must disclose this confidential customer list, and if its customers must face massive new fees for use of Bloomberg’s service, Bloomberg and its customers would be irreparably harmed. That harm, moreover, would flow from an immediately effective amendment that the Commission has not yet approved, and that the Commission likely will find unfair, unreasonable, and discriminatory under the Exchange Act. In order to preserve the status quo pending the Commission’s review, Bloomberg yesterday respectfully requested a stay of the amendment’s effectiveness under Rule 401 of the SEC Rules of Practice.
Bloomberg’s stay motion and supporting exhibits, which explain the invalidity and harm
of CTA’s amendment in greater detail, have been filed with the Commission, shared with CTA, and attached to this letter.
Respectfully submitted,
By: Greg Babyak Bloomberg LP Enclosures cc: Jay Clayton, Chair
Robert J. Jackson, Jr., Commissioner Hester M. Peirce, Commissioner Michael S. Piwowar, Commissioner
Kara M. Stein, Commissioner Brett Redfearn, Director, Division of Trading & Markets David Shillman, Associate Director, Division of Trading & Markets
John Roeser, Associate Director, Division of Trading & Markets David Metzman, Counsel to the Director, Division of Trading & Markets
In The Matter of:
UNITED STATES OF AMERICA before the
SECURITIES AND EXCHANGE COMMISSION
The Application of BLOOMBERG L.P. Admin. Proc. File No. 3-18316
For Review of Amendments of the CTA Limiting Access to its Services
BLOOMBERG L.P.'S MOTION TO STAY CTA'S FEE AMENDMENT
MOTION TO STAY
Pursuant to § 11 of the Securities Exchange Act and Rule 401 of the Commission Rules of
Practice, Bloomberg L.P. ("Bloomberg") respectfully requests that the Commission stay the
Amendment to the CTA/CQ National Market System plan published November 14, 2017, Release
No. 34-82071 ("Amendment" or "Release"), by the Consolidated Tape Association ("CTA'').
The Amendment limits access to CTA services in violation of § 1 lA by imposing unfair
and unreasonable fees unrelated to the exchanges' costs; by arbitrarily and capriciously extending
non-display and access fees to Bloomberg' s Server Applications Program Interface ("SAPI")
display service; and by unnecessarily burdening competition and unfairly discriminating against
Bloomberg. The Amendment's massive fee increase disserves the public interest and irreparably
harms Bloomberg and its customers, while a stay pending Commission review of the Amendment
would not harm CT A.
Dated: February 6, 2018 Respectfully submitted,
SIDLEY AUSTIN LLP
Benjamin Beaton Daniel J. Feith 1501 K Street, NW Washington, D.C. 20005 (202) 736-8000 [email protected] [email protected] [email protected]
Counsel for Bloomberg L.P.
TABLE OF CONTENTS
PAGE
INTRODUCTION ........................................................................................................................... 1
BACKGROUND ............................................................................................................................. 2
I. Core Market Data ..................................................................................................... 2
II. Bloomberg's Display and Data-Feed Services ........................................................ 4
III. CT A Recognizes SAPI as a Display Service ........................................................... 7
IV. CTA Targets SAPI with Access and Non-Display Fees .......................................... 8
ARGUMENT ...................................................................................................................... _ ........... 10
I. Bloomberg Is Likely to Succeed on the Merits ..................................................... 10
A. CT A's Fees Are Not Cost-Based ............................................................... 11
B. CTA Arbitrarily Redefined Its Fees .......................................................... .14
1. Departure from 2013/2014 Amendments ...................................... 14
2. CT A's Mischaracterization of SAPI. ............................................. 17
C. CT A's Amendment Is Unfairly Discriminatory ....................................... .18
II. Bloomberg Will Face Irreparable Harm in the Absence of a Stay ........................ 19
III. A Stay Will Not Harm Other Parties .................................................................... .20
IV. A Stay Will Serve the Public Interest .................................................................... 21
CONCLUSION .............................................................................................................................. 24
TABLE OF AUTHORITIES
Page(s)
Cases
Am. Wild Horse Preservation Campaign v. Perdue, 873 F.3d 914 (D.C. Cir. 2017) ................................................................................................. 16
Bell At!. Tel. Cos. v. FCC, 206 F.3d 1 (D.C. Cir. 2000) ..................................................................................................... 16
Bunker Ramo, Release No. 15372, 1978 WL 171128 (Nov. 29, 1978) ............................................. .10, 12, 20
Davis v. Pension Benefit Guar. Corp., 571 F.3d 1288 (D.C. Cir. 2009) ............................................................................................... 10
Disclosure of Payments by Resource Extraction Issuers, Release No. 67717, 2012 WL 5286931 (Sept. 12, 2012) .................................................. 20, 21
Exchange Services, Inc., Release No. 34-22245, 1985 WL 548404 (July 10, 1985) ...................................................... 10
Hawaiian Dredging Constr. Co. v. NLRB, 857 F.3d 877 (D.C. Cir. 2017) ................................................................................................. 17
Institutional Networks Corp., Release No. 20088, 1983 WL 04184 (Aug. 16, 1983) ................................................ 10, 19, 21
Institutional Networks Corp., Release No. 20874, 1984 WL 472209 (Apr. 17, 1984) ........................................ .12, 19, 20, 22
In re Mohammed Riad, Release No. 32174, 2016 WL 3648316 (July 8, 2016) ........................................................... .10
Motor Vehicle Mfrs. Ass 'n v. State Farm, 463 U.S. 29 (1983) ................................................................................................................... 17
NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010) ......................................................................................... passim
NetCoalition v. SEC, 715 F.3d 342 (D.C. Cir. 2013) ........................................................................................... 10, 11
Susquehanna Int 'l Group v. SEC, 866 F.3d 442 (D.C. Cir. 2017) ................................................................................................. 18
11
Statutes
Exchange Act §3(a)(22)(A)-(B) ....................................................................................................... 3
Exchange Act §6(b) ......................................................................................................................... 3
Exchange Act§ 1 lA, 15 U.S.C. §78k-1 .................................................... l, 2, 3, 10, 11, 21, 23, 24
Other Authorities
64 FR 70613 (Dec. 17, 1999) ............................................................................................... 3, 12, 13
69 FR 71256 (Dec. 8, 2004) ........................................................................................................... 12
70 FR 37496 (June 29, 2005) ................................................................................................. 2, 3, 12
73 FR 74770 (Dec. 9, 2008) ............................................................................................... 11, 12, 19
78 FR 449847 (July 25, 2013) ................................................................................................... 9, 15
79 FR 60536 (Oct. 7, 2014) ................................................................................................... passim
Rule 1 Ob-I 0 ...................................................................................................................................... 3
Rules 601 (b ),602(b) ......................................................................................................................... 2
Rule 603(b) ...................................................................................................................................... 3
Rule 608 ......................................................................................................................................... 11
S. Rep. 94-75 (1975) .............................................................................................................. 2, 3, 21
111
UNITED STATES OF AMERICA before the
SECURITIES AND EXCHANGE COMMISSION
In The Matter of:
The Application of BLOOMBERG L.P.
For Review of Amendments of the CTA Limiting Access to its Services
File No. 3-18316
BRIEF IN SUPPORT OF BLOOMBERG'S MOTION TO STAY CTA'S FEE AMENDMENT
Bloomberg respectfully submits this brief in support of its motion to stay CT A's
Amendment.
INTRODUCTION
The Amendment under review unilaterally increases fees for consolidated top-of-book data
from $136 to $9,136 per month for a typical customer. The fees apply to data that CTA alone may
sell, and that all broker-dealers must buy. The Amendment targets a single service sold by a single
vendor-Bloomberg' s Server Applications Program Interface ("SAPI"). And it stands to benefit
competing vendors, including the corporate sister of CT A's administrator, NYSE.
Under Section l lA of the Exchange Act, exchanges must make market data available at
fair, reasonable, and non-discriminatory rates. Given the absence of competition for consolidated
top-of-book data, this standard demands that the Commission ensure fees remain reasonably
related to the cost of collecting and disseminating the data. See, e.g., NetCoalition v. SEC, 615
F.3d 525, 534-36 (D.C. Cir. 2010) (NetCoalition I).
Yet CTA has never even claimed, much less demonstrated, that its newly-increased fees
bear any relationship to the exchanges' costs. Nor has it justified extending access and non-display
1
fees to a display service like Bloomberg SAPI. SAPI may be used only by authorized human
subscribers viewing displayed data. Accordingly, CTA has recognized for more than a decade that
SAPI is a display service. Although CTA previously justified its 2013 and 2014 access and non
display fees based on the use of data feeds to power computerized "black box" trading, CT A now
asserts that those fees should apply to SAPI, a display service viewed by humans. CTA's stated
basis for this about-face is restoring "competitive balance among vendors." Release 24. That
assertion, however, is factually unsupported and legally irrelevant. Indeed, the Amendment may
create a discriminatory competitive imbalance by singling out SAPI for fees apparently not borne
by similarly situated services.
Allowing CT A to impose these fees for its monopoly data will irreparably harm Bloomberg
and its SAPI customers, interfere with investors' access to information and services, and allow
profit-driven exchanges to pick winners and losers in the market. The Commission should stay
enforcement of the Amendment pending review of its lawfulness under §1 lA.
BACKGROUND
I. Core Market Data
This proceeding concerns consolidated core data, "the heart of the national market system."
Regulation NMS, 70 FR 37496, 37503 (June 29, 2005) (quoting H.R. Rep. No. 94-229, at 93
(1975)). Core data consists of(l) the price, size, and exchange of the last sale; (2) each exchange's
current highest bid and lowest offer, and the shares available at those prices; and (3) the national
best bid and offer (i.e., the highest bid and lowest offer currently available on any exchange). Id.
at 37558. Congress found this "accurate, up-to-the-second information" about the prices of
securities transactions, bids, and offers is essential to giving "each investor ... the opportunity for
the best possible execution of his order." S. Rep. 94-75, at 7, 9 (1975). Broker-dealers must freely
provide their best bids and offers to the exchanges, Reg. NMS Rules 601 (b ), 602(b ); exchanges
2
must provide core data to a central processor, Rule 603(b); and broker-dealers must purchase the
consolidated data to satisfy their best-execution obligations and compete in the market, Rule 1 0b-
10; NetCoalition I, 615 F.3d at 529.
This core or "top-of-book" data is inherently a monopoly product: through an "exclusive"
securities information processor (SIP), exchanges offer a single stream of data available nowhere
else. Exchange Act §3(a)(22)(A)-(B). Congress recognized that an exclusive processor "is, in
effect, a public utility" over which the Commission has "a special oversight and regulatory role."
S. Rep. No. 94-75, at 11-12. Given the data's importance to investors, "one of the Commission's
most important responsibilities is to preserve the integrity and affordability of the consolidated
data stream." 70 FR at 37503. The "fees charged by a monopolistic provider of a service (such
as the exclusive processors of market information)" must therefore "be tied to some type of cost
based standard in order to preclude excessive profits if fees are too high." Regulation of Market
Information Fees and Revenues, 64 FR 70613, 70627 (Dec. 17, 1999). 1
CTA is the exclusive processor for securities listed on NYSE (Network A) and on several
other exchanges, including those affiliated with NYSE (Network B). Id. at 70615-16. NYSE
administers Networks A and B on CT A's behalf. It distributes the data at fees published in national
market system plans. The Commission reviews those fees to ensure they are "fair and reasonable"
and "not unreasonably discriminatory." Rules 603(a)(l)-(2), 608; Exchange Act §§6(b) &
11A(a)(2), (b )(5).
1 The Commission is separately reviewing whether prices for "depth-of-book" data are competitively constrained. In re SIFMA, No. 3-15350. Depth-of-book data consists of unconsolidated information regarding limit orders posted on individual exchanges. The suggestion in CT A's notice of appearance that this case be held pending a decision in In re SIFMA ignores the differences between core and non-core data, see Netcoalition L 615 F.3d at 529-30, and offers no argument for abeyance.
3
II. Bloomberg's Display and Data-Feed Services
Investors receive real-time market data in two basic ways: display services and data feeds.
McManus Deel. if4. Display services deliver data for viewing by humans on a screen.2 The
quintessential display use is viewing data on a terminal screen before executing trades. Data feeds,
by contrast, allow data to be used for any purpose, even by computers without human intervention
or viewing. Id. The quintessential non-display use is automated, algorithmic, or black box trading.
79 FR 60536, 60538 (Oct. 7, 2014).
Market data reaches the investing public primarily through data vendors, including
Bloomberg, Thomson Reuters, ICE Data Services ("IDS"), and others. Bunnell Deel. ,r,r 3, 7, 10.
IDS is owned by Intercontinental Exchange, NYSE's parent company, which purchased IDS's
predecessor in 2015 for $5 .2 billion.
This Amendment concerns Bloomberg's SAPI service, which functions in connection with
the Bloomberg Terminal ("Terminal") display service. The Terminal software displays real-time
market data, news, and analytics on the desktops, laptops, or smartphone devices of authorized
Bloomberg subscribers. McManus if4( a). SAPI supplies the same data for display on the same
devices with which the same subscribers view the Bloomberg Terminal. On those devices, SAPI
users can view data on third-party and customer proprietary applications not available in the
Terminal, allowing them to choose the best ways to use data to inform their investment decisions.
Bunnell ,r,r17-18. Like the Terminal, SAPI supports only applications that display data to
authenticated subscribers logged into the Terminal on a display device. ,r,r4-6. The principal
2 This brief uses "market data" and "data" to include "derived data" created from consolidated core data and displayed on a device. Release 5 n.12.
4
difference between the Terminal and SAPI is that SAPI supplies data to display devices via a
customer server, not directly, as illustrated below:
BECICIIIBERG
Bunnell Ex. B.
SAPI provides users and their firms several technological benefits. First, all displays and
applications connected to the server receive consistent data, ensuring that separate applications
utilize the same real-time information. Second, SAPI efficiently downloads data once to a central
server for distribution to the devices of authorized users, not redundantly to different users'
devices. Third, applications installed in a central location can be maintained and controlled more
effectively than those installed on multiple individual devices. McManus ,I,I7-12. These benefits
all facilitate the viewing ofreal-time data on a screen by humans. Bunnell ,I19.
Bloomberg also offers a data feed known as the Bloomberg Market Data Feed, or B-PIPE.
B-PIPE does not have to be used in connection with a device running Bloomberg Terminal, or by
an authorized Terminal subscriber. Customers may use B-PIPE for automated, algorithmic, or
5
other "black box" applications. ~9. And unlike SAPI, B-PIPE customers may authorize any
number of users, even if they are not Terminal subscribers. McManus ~23.
B·PIPE Bloomberg Data Center B·PIPE
Bloomberg Distribution Platform
Bloomberg User
3rd Patty
Application
Bloomberg UMr
Internal Proprietary Application
Bunnell Ex. C.
Non* Bloomberg
User
3rd Party
Application
Black Box.
Algorithmic Trading
Application
3rd Party Distribution Platform
Bloomberg User
3rd Party
Application
Bloomberg User
Internal Proprietary Application
Non* Bloomberg
User
3rd Patty
Application
Black Box
Algorithmic Trading
Application
Bloomberg has strong incentives to ensure SAPI subscribers do not use data in ways that
require a B-PIPE subscription. B-PIPE subscriptions are considerably more expensive than SAPI
subscriptions. And the data SAPI supplies includes proprietary data that Bloomberg provides only
to paid subscribers. Bunnell ~16. To protect these interests and ensure that SAPI is used only for
display purposes, Bloomberg contractually prohibits "any non-user-based, non-display
application, including but not limited to any automated algorithmic trading application" on SAPI.
McManus ~19. It also limits SAPI data consumption to levels typically employed for display
rather than black box use. And on the compliance front, Bloomberg has contractual rights to audit
SAPI usage and requires SAPI customers to regularly certify that they are using SAPI only for
authorized purposes. ~17. Bloomberg takes further measures to ensure SAPI is used only for
display purposes by reviewing and registering third-party applications and working closely with
customers on installation and development of their applications. ~~19-21.
SAPI customers also must implement Bloomberg's technological controls to ensure that
only authorized, entitled Terminal subscribers access and view data. The controls require SAPI
users to log into the Bloomberg Terminal using biometric identification and a unique alphanumeric
6
identifier. ,I22(a)-(b ). Customer servers then connect to Bloomberg's entitlement-verification
system, which verifies the user's identity and entitlements, and ensures the user is logged onto
only one device at a time. ,I22( c ). SAPI technology monitors the amount of subscribers' data
downloads and reports excessive usage so Bloomberg can enforce consumption limits. ,I22( d).
Thomson Reuters, FactSet, and IDS offer display services and/or data feeds that compete
with Bloomberg's services. Thomson Reuters offers Eikon desktop, Eikon Server API, and the
Elektron data feed. Bunnell ,I,I7, 10. IDS "compete[s] with ... suppliers of financial market data,
such as Bloomberg," by offering "trading applications, desktop solutions and data feeds." 2016
ICE Annual Report 9, 55, at http://ir.theice.com/-/media/Files/I/Ice-IR/annual-reports/2016/2016-
annual-report. pdf.
III. CT A Recognizes SAPI as a Display Service
From SAPI's introduction in 2004 until CTA's recent about-face, CTA consistently
acknowledged that SAPI is a display service, not a data feed. In 2004, CT A and Bloomberg
updated their vendor agreement for Network A data to expressly recognize that SAPI is a part of
the Bloomberg display service, and that B-PIPE is the only Bloomberg service constituting a data
feed (or comparable uncontrolled service). Kotovets Deel. ,I,I5-6. In 2005, CTA and Bloomberg
updated their Network B vendor agreement with an identical acknowledgment that SAPI is part of
Bloomberg's "interrogation display services," rather than a data feed. ,I,Il0-11. And in 2010, they
again agreed that SAPI is not "a data feed or other type of service where control over the use of
Market Data and the reporting of uses and display devices cannot be directly maintained by
[Bloomberg]," and that B-PIPE is the "only" Bloomberg offering fitting this description. ,I13.
CT A continued to treat SAPI as a display service after increasing fees for data feeds in
2013 and establishing new fees for "non-display" uses of market data "delivered via ... data feeds"
in 2014. ,r,r 16, 19. CT A justified its far higher non-display fees based on the proliferation of non-
7
display usage, especially automated and algorithmic trading, which "allow[ ed] users to automate
functions, to achieve greater speed and accuracy, and to reduce costs of labor." 79 FR at 60538.
CTA explained that firms deriving "great value" and "considerable profit" from "apply[ing]
trading algorithms to [market] data without widespread data access by the firm's employees"
would pay fees that "reflect the value of the data" that they receive. Id. at 60537-38. These non
display fees, CT A said, would "offset the revenue losses attributable to the reduction in
professional subscriber device rates" by human users. Id. Between 2014 and late 2016, Bloomberg
and CT A continued to treat SAPI as a display service, without CT A voicing any concern.
IV. CTA Targets SAPI with Access and Non-Display Fees
In the fall of 2016, CTA (through NYSE) contacted Bloomberg to inquire whether SAPI
amounted to non-display use. After receiving assurance that SAPI remained a display service,
CTA nevertheless announced in December 2016 that it had filed a "no-fee change amendment,"
which purportedly "clarif[ied]" the definition of "non-display use" and the applicability of the
access fee. Kotovets ,I,I21-26. The amendment did not mention SAPI, but CTA sent a letter to
Bloomberg asserting that the amendment rendered SAPI a non-display use and data feed. ,I29.
CT A's letter did not attempt to reconcile this new assertion with its longstanding position that
SAPI was a display service, not a data feed. After opposition from Bloomberg, SIFMA, small-to
mid-sized firms, and others, however, CT A withdrew the amendment without explanation. ,I32.
CT A nevertheless reissued the same changes by filing the Amendment at issue here. Like
the withdrawn proposal, the Amendment radically alters the definition of "non-display use" and
the applicability of the access fee:
8
Data used (1) for non-display or (2) in "a manner that ... can be manipulated and disseminated to one or more devices, display or otherwise, regardless of encryption or instructions from the redistribution vendor regarding who has authorized access to the data." Release 13.
Unlike the withdrawn proposal, however, this Amendment lays bare CT A's motives. It identifies
just one affected service-SAPI-and admits that the new definitions aim to impose non-display
and access fees on SAPI users. Release 9-11.
The Amendment's impact on SAPI and SAPI customers would be enormous. Customers
currently pay CTA between $19 and $45 per SAPI user per month for Network A securities and
$23 per user per month for Network B securities, in addition to Bloomberg's charge for SAPI.
Ko to vets 118. Under the Amendment, SAPI customers would pay CT A at least $6,000 more per
month in non-display and access fees for Network A and $3,000 more per month for Network B.3
For a typical SAPI customer, who uses SAPI for Network A and Bon two devices, CTA fees will
soar from $136/month to at least $9,136/month, a 6,617% increase. Bunnell 127. In order to
impose these extreme fee hikes, CT A has demanded Bloomberg hand over its SAPI customer list.
Kotovets 134.
3 Because SAPI bundles last-sale and bid/ask data, customers pay both fees. The increase would double for customers using two of CT A's three categories of non-display use. Release 6.
9
ARGUMENT
Until the Commission adjudicates Bloomberg' s challenge to the lawfulness of this
Amendment under § 11 A, it should stay enforcement of the Amendment to prevent CT A's
unprecedented fees from harming investors and destroying a valuable service. Bloomberg is
entitled to a stay because (1) it is likely to succeed on the merits; (2) it faces irreparable harm; (3)
no other party will suffer substantial harm; and ( 4) a stay would serve the public interest. See
Institutional Networks Corp., Release No. 20088, 1983 WL 04184, at *4 n.24 (Aug. 16, 1983)
(Instinet I). A stay is particularly warranted given Bloomberg's "unusually strong showing on one
of the factors," the likelihood of success. Davis v. Pension Benefit Guar. Corp., 571 F.3d 1288,
1291-92 (D.C. Cir. 2009). Thus, the motion "does not necessarily have to make as strong a
showing on another factor." Id.; see In re Mohammed Riad, Release No. 32174, 2016 WL
3648316, at *1 (July 8, 2016). The "express language of §11A(b)(5)(A) confers broad discretion
upon the Commission to issue a stay" in these circumstances to "preserv[ e] the status quo between
the [SIP] and the aggrieved party until the Commission has the opportunity to decide the merits of
the dispute." Bunker Ramo, Release No. 14606, 1978 WL 197047, at *3-4 (Mar. 24, 1978).
I. Bloomberg Is Likely to Succeed on the Merits
The Commission must set aside any limitation on access to services offered by a SIP unless
it finds that the limitation 1s "fair and reasonable," equitable, and
nondiscriminatory. § 11 A(b )( 5)(B). Just as the Commission's determination is subject to
arbitrary-and-capricious review in court, a SIP must provide the Commission with a "substantial
basis" to justify its fees, supported by reasoned decisionmaking and record evidence. NetCoalition
I, 615 F.3d at 532, 541, 544; cf NetCoalition v. SEC (NetCoalition 11), 715 F.3d 342, 347, 353
(D.C. Cir. 2013) (acknowledging APA review of market-data fees); Exchange Services, Inc.,
10
Release No. 34-22245, 1985 WL 548404, at *3 (July 10, 1985) (arbitrary-and-capricious review
of SRO decision).
This Amendment violates § 1 lA in at least three ways. It (1) imposes fees that bear no
relationship to the exchanges' costs of collecting and distributing data, (2) arbitrarily and
mistakenly classifies SAPI as a "non-display use" and "tantamount to a data feed," and (3) unfairly
discriminates against Bloomberg and its customers.4
A. CTA's Fees Are Not Cost-Based
An exclusive processor must make consolidated data available on "fair and reasonable
terms." §1 lA(c)(l)(C). The Commission has long recognized that a "fair and reasonable" fee for
core data must be reasonably related to the exchanges' costs of producing and disseminating the
data.
This requirement reflects that core data is a monopoly product that, by law, broker-dealers
must purchase. 5 Commission oversight, not competition, is the only force that can constrain the
prices exchanges charge. The Commission therefore "has determined that ... core data fees should
bear some relationship to cost." NetCoalition I, 615 F.3d at 529 n.2; accord NetCoalition II, 715
F.3d at 345.6 "[B]ecause the mandatory nature of the core data distribution regime leaves little
room for competitive forces to determine products and fees, the [exchanges'] cost of producing
the data should be at least a factor in deciding whether a proposed fee is fair and reasonable." SEC
4 The Amendment is also procedurally invalid under Rule 608. CT A failed to offer meaningful cost-benefit or economic-impact analysis, did not publish the text of its rule changes, and inappropriately designated as immediately effective a change that should have required Commission approval.
5 73 FR at 74780 (trade-through and best-execution requirements).
6 The exchanges have not identified competitive or other constraints for consolidated top-of-book fees.
11
Brief, NetCoalition I, Nos. 09-1042, -1045 (Jan. 4, 2010). The courts and the Commission have
repeatedly endorsed this requirement. 7
The Commission has enforced this requirement particularly stringently when a SIP
competes with vendors by selling data to end-users. In those circumstances, Instinet 11 held that
"[t]he exclusive processor's fees should be based strictly on the expenses it incurs in providing the
information to vendors." 1984 WL 472209, at* 11. "To the extent such fees are not cost-based,"
the Commission explained, "value-of-service ratemaking is a price-discrimination device, used
either to maximize a monopolist's profit or to subsidize certain interests." Id. ( alterations
omitted). CT A's actions trigger these precise concerns: NYSE, CT A's administrator and member,
shares a corporate parent with IDS, Bloomberg's competitor.
Remarkably, despite the requirement to consider costs, CTA's Amendment is wholly silent
on that score. CT A never acknowledges a relationship between costs and fees. Nor does it mention
the exchanges' costs: not in absolute, incremental, directional, or relative terms. CTA merely
asserts its "belie[f]" that the Amendment "is fair and reasona~le." Release 22. But CTA's
unsupported "belief'-even if it were correct-cannot establish that the exchanges' costs justify
the proposed fees. See NetCoalition I, 615 F.3d at 538 (rejecting unsupported assertion that NYSE
7 See NetCoalition I, 615 F.3d at 536 (core-data fees must be cost-based); Bunker Ramo, Release No. 15372, 1978 WL 171128, at *1-2 (Nov. 29, 1978) (costs relevant to lawfulness of market-data fees); Jnstinet 11, Release No. 20874, 1984 WL 472209, at *4-5 (Apr. 17, 1984) (rejecting SIP's data fee based on "valueof-service" rather than "the costs of collecting, validating and processing quotations"), aff'd sub nom. Nat 'l Ass'n of Sec. Dealers, Inc. v. SEC, 801 F.2d 1415 (D.C. Cir. 1986); 64 FR at 70619 ("One standard commonly used to evaluate the fairness and reasonableness of fees, particularly those of a monopolistic provider of a service, is the amount of costs incurred to provide the service."); Concept Release Concerning Self-Regulation, 69 FR 71256, 71273 (Dec. 8, 2004) ("'the total amount of market information revenues should remain reasonably related to the cost of market information"'); Regulation NMS, 70 FR 37496, 37504 (June 29, 2005) ("requir[ing] all [exchanges] to participate jointly in disseminating data through a single consolidator ... affords little opportunity for market forces to determine" fees); ArcaBook Order, 73 FR 74770, 74779-80, 74786 (Dec. 9, 2008) ("mandatory nature of the core data disclosure regime leaves little room for competitive forces to determine products and fees").
12
"believes that the proposed market data fees would reflect an equitable allocation of its overall
costs ... "). On this basis alone, the Amendment is invalid. Moreover, even if CTA had tried to
offer a proper justification, it is inconceivable that the costs of collecting and distributing this data
could warrant a 6000% increase for typical customers.
CTA also offers no data or analysis regarding the revenues it will receive from the new
fees. See 64 FR at 70628. The Amendment insists only that CTA "is not motivated by a plan to
increase fees or revenues." Release 22. Motivation, however, is irrelevant to whether fees are
economically fair and reasonable. The Amendment is indisputably a fee increase for SAPI
subscribers. A typical customer would see fees rise from $136 to $9,136 per month. See Release
23 ( acknowledging "potential revenue increase" unless customers switch from SAPI to a different
service). 8 CT A claims it is unable to "conduct a precise analysis"-or apparently any analysis
"of what changes to revenue would accrue" from its Amendment. It merely asserts that CT A
"generally do[es] not believe that this proposed amendment would result in a material increase in
revenue." Id. at 22-23. But the implausible notion that a 6,000% increase will have no revenue
impact does not excuse CT A's obligation to justify its revenues in relation to its costs.
The Amendment attempts to justify the fee increase as a means of restoring "balance"
among data vendors. Release 9. This has nothing to do with the exchanges' costs and revenues.
Because CTA offers no cost-based justification for the fees this Amendment will generate, it has
failed to show that those fees are fair and reasonable.
8 CT A stresses that non-professional users would experience no fee increase. Release 3. This is irrelevant. There are no non-professional SAPI users. Bunnell ,I29 n.4. It also recognizes that the increase would affect hundreds of Bloomberg customers, but mistakenly believes "Bloomberg is referring to ... a person as opposed to a firm." Release 22-23. Bloomberg has hundreds of SAPI customer firms, which may authorize multiple end users to use SAPI.
13
B. CT A Arbitrarily Redefined Its Fees
The Amendment is arbitrary and capricious in at least two respects: it (1) redefines non
display use and access fees in a manner that contradicts CTA's prior justifications for these fees
and (2) rests on repeated factual errors about SAPI. CT A has not "articulate[ d] a satisfactory
explanation for its action" or "rational[ly] connect[ed] ... the facts found and the choice made."
NetCoalition I, 615 F.3d at 532-33.
1. Departure from 2013/2014 Amendments. CT A characterizes the extension of
non-display and access fees as a "clarification" of its 2014 non-display amendment. But the
Amendment in fact contradicts the reasoning underlying the 2013 and 2014 amendments-a
paradigmatic illustration of arbitrary and capricious action.9 In 2014, CTAjustified new non
display fees by arguing that the number of display devices ( and associated revenues) had decreased
as technological advances had allowed traders to "automat[ e] many functions," especially
"automated and algorithmic trading." 79 FR at 60538. CTA explained that non-display devices
"consume large amounts of data," and "can process the data far more quickly than any human
being looking at a terminal." Id. The 2014 definition of"non-display use" reflected these concerns
about computers replacing humans, explicitly defining the term to incorporate the use of a data
feed to deliver data used without any display to a human:
Id.
Non-Display use refers to accessing, processing or consuming [data], whether delivered via direct and/ or redistri bu tor data feeds, for a purpose other than in support of a data recipient's display or further internal or external redistribution.
9 SIFMA challenged the 2014 amendment on several grounds, including the lack of cost-based justification. See File No. 3-16220. The Commission has not yet ruled. Bloomberg's current challenge, however, does not depend on the invalidity of that amendment. Even assuming it was lawful, CT A's 2014 reasoning does not justify the 2017 amendment.
14
This distinction echoed CT A's 2013 amendment raising access fees, which likewise
applied only to data feeds. That amendment relied on the use of data feeds for non-display
applications "that apply trading algorithms to the data, but that do not require widespread data
access by the firm's employees." 78 FR 44984, 44987 (July 25, 2013). It did not apply the fees
to data delivered in formats that controlled who could use the data.
Far from "clarifying" these definitions, the 2017 Amendment contradicts them.
As to the non-display fee, CT A extends that fee to SAPI only by abandoning the crucial
distinction between data displayed to a human and data used only by a computer. Release _.
CT A purports to limit the non-display fee to data that is not "visibly available to a data recipient
on a device." Release 11. But it ignores that SAPI is a display service that cannot be used for
non-display purposes. McManus GjfGjfl 6-22. Similarly, SAPI use does not involve trading "far more
quickly than any human being looking at a terminal," 79 FR at 60538, precisely because SAPI is
used by a "human being at a terminal." CT A silently abandons its previous requirement that non
display use involve data "delivered via ... a data feed," which had underscored the connection
between non-display use and automated or black box trading. Now, CTA collapses the two
concepts: any non-display use would, after the fact, render the delivery a data feed. Release 8-9.
CTA's position that this merely clarifies the 2014 amendment is belied by its own conduct: For
more than a decade-both before and after that amendment-CT A treated SAPI as a display
service. Kotovets Gjf20. This disconnect between the 2014 amendment and its post hoc extension
to SAPI reveals the 2017 Amendment for what it is: a naked gerrymander of the term "non-display"
to reach a display service.
As to the access fee, the previous definition from 2013 likewise focused on "data feeds"
that perform "non-display functions" such as "black bo[x]" and "algorithm[ic]" trading. 78 FR at
15
44987. But the new definition applies whenever data can be "used by the subscriber as an input
into its own systems and software," Release 14, even for display use. The Amendment applies
access fees in two circumstances: (1) if data is used for non-display purposes (which makes the
non-display fee redundant); or (2) if "data can be manipulated and disseminated ... regardless of
encryption or instructions from the redistribution vendor regarding who has authorized access"
(which might stretch far beyond data feeds, at CTA's whim). Release 13. CTA's open-ended
standard does not define what it means for data to be "manipulated and integrated into
[subscribers'] own systems." Release 7. Conceivably, CTA could claim any computerized system
can "manipulate" or "integrate" data, see McManus ifif25-26-a risk CT A acknowledges by
explicitly exempting Excel without any reasoned explanation. See Release 8. 10
CTA's redefinition rests on a single concern: supposed competitive imbalance among
vendors based on differing interpretations of the 2014 amendment. CT A offers no evidence of
any imbalance, identifies no products or vendors purportedly affected, and cites no authority for
setting fees based on vendor competition. Even if an imbalance existed, CT A's "clarification" is
stunningly overbroad: it radically expands fees. That redefinition abandons the familiar distinction
between data feeds and display devices, contradicts the 2014 amendment's focus on algorithms
replacing eyeballs, and reverses its longstanding treatment of SAPI. This departure from "past
practices and official policies," without "offer[ing] a reasoned explanation for" redrawing these
fundamental categories, is arbitrary and unlawful. Am. Wild Horse Preservation Campaign v.
Perdue, 873 F.3d 914, 923 (D.C. Cir. 2017); Bell At!. Tel. Cos. v. FCC, 206 F.3d 1, 6-8 (D.C. Cir.
1° CTA arrogates to itself "the right to make the sole determination as to whether a data recipient's use is subject to the Non-Display Use fee or the device fee." Release 13. This further exemplifies the Amendment's arbitrary and capricious nature.
16
2000) (vacating classification scheme that "yield[ ed] intuitively backwards results" that were
inexplicably inconsistent with prior agency decisions).
2. CT A's Mischaracterization of SAPI. The Amendment also relies on a series of
factual errors about SAPI. CT A claims that SAPI is "tantamount to a data feed because it is a
delivery format that is not controlled either in the entitlements or how the data is displayed."
Release 14. This assertion ignores the strict contractual, biometric, and technological controls that
ensure SAPI is used only for display purposes and only by authorized users. McManus ilil16-22.
Indeed, as described above, CT A has long recognized that use of SAPI data is controlled, has never
raised concerns that SAPI's controls are inadequate, and provides no such evidence now. Nor did
CT A audit Bloomberg regarding its subscribers' data use following the 2014 amendment.
Kotovets ill 9. CTA has consistently recognized that B-PIPE, not SAPI, is Bloomberg's data feed.
CTA's effort to redefine "access fee" specifically to target SAPI "runs counter" to the evidence
and must be set aside. Motor Vehicle Mfrs. Ass 'n v. State Farm, 463 U.S. 29, 43 (1983); see, e.g.,
Hawaiian Dredging Constr. Co. v. NLRB, 857 F.3d 877, 883, 885 (D.C. Cir. 2017) (vacating
decision that "fail[ ed] adequately to address the evidence" and "offered no reason for rejecting"
evidence inconsistent with agency's conclusion).
CT A also claims that "a customer would not need" SAPI if it "only needs the display
features" because "the functionality made available by [SAPI] is not at its core a display product."
Release 10-11 (SAPI customers "presumably . . . us[ e] the data for purposes other than just
display"). This too is mistaken. Customers may use SAPI data only in display applications. Supra
4-7. The advantages SAPI offers-an array of third-party display applications, data consistency,
and technological efficiencies-serve only to enhance display usage by humans. McManus ilil7-
l 5.
17
Finally, CT A asserts that SAPI permits non-display use by "allow[ing] customers to run
server-based applications on market data." Release 10. But whether an application is "server
based" or desktop-based has no bearing on whether it facilitates display use. McManus ,r14. Those
terms merely indicate whether the application is stored on a server or on the individual user's
desktop device. The critical fact is that SAPI delivers data exclusively for use in display
applications, just like the Bloomberg Terminal, which CT A recognizes is "a display product." Id.
C. CTA's Amendment Is Unfairly Discriminatory
CT A's only asserted rationale for this Amendment is the purported need to "level the
competitive imbalance that currently exists" among vendors under the 2014 amendment. Release
21. As noted above, this has no bearing on whether fees are cost-justified under the Act. CTA,
moreover, offers no support for this assertion, identifying no market-data vendor or offering that
is unfairly disadvantaged relative to SAPI. NetCoalition I, 615 F .3d at 540; Susquehanna Int 'I
Group v. SEC, 866 F.3d 442, 447-48 (D.C. Cir. 2017) (action "unsupported by substantial
evidence").
To the contrary, evidence indicates that the Amendment will unfairly disadvantage SAPI.
Thomson Reuters markets its Eikon SAPI service by suggesting it is not subject to non-display or
access fees. Bunnell if23. 11 If true, that suggests the current competitive landscape is level, and
that imposing new fees only on Bloomberg SAPI-the only offering CT A identifies-will unfairly
discriminate against it. And if CT A imposes the fees on all vendors' SAPI customers, it would
unjustifiably burden competition by targeting a low-cost source of essential market data with high
new fees.
11 Thomson Reuters' comment letter supports CTA's redefinition of data feed to cover Bloomberg SAPI. See File No. SR-CTA/CQ-2017-04. Butthe letter never states that its Eikon service is treated as a data feed.
18
That risk of anticompetitive discrimination is heightened by the relationship between
NYSE, which administers CT A, and IDS, a Bloomberg competitor. As the Commission has
previously recognized, even the potential for anticompetitive motives warrants heightened scrutiny
of fee amendments. See lnstinet 11, 1984 WL 472209, at *11 (invalidating Nasdaq fees imposed
on the offerings of a competing vendor). 12
II. Bloomberg Will Face Irreparable Harm in the Absence of a Stay
Allowing CT A to impose this Amendment on SAPI will irreparably harm Bloomberg. An
over-6, 000% fee increase on the typical SAPI customer will fundamentally change SAPI' s price
point and cause many customers to terminate their subscriptions and purchase alternative data
services. Bunnell 128. The erosion of this customer base will irreparably damage SAPI. Because
of substantial switching costs, former SAPI customers will face hurdles to re-purchasing SAPI if
and when the fees are later invalidated (as is likely to be the case for the reasons discussed above).
Data contracts require multi-year commitments and large up-front payments, on top of which firms
must bear associated costs of removing prior technology, purchasing and installing new hardware
and software, and training users on new systems. il33. This permanent loss of customers,
revenues, and position in the data marketplace for SAPI constitutes irreparable harm to Bloomberg.
See lnstinet 1, 1983 WL 404184, at *7 (recognizing that loss of"potential customers," "revenues,"
and "competitive advantages" constitutes irreparable harm). Competitors affiliated with NYSE or
chosen by NYSE to serve on the CT A Advisory Committee, meanwhile, have their own economic
12 See also Jnstinet II, 1984 WL 4 72209, at * 10 ( even potential anti-competitive motivations by a SIP "requires the Commission to scrutinize [the SIP's] fees carefully to ensure that they do not have inappropriate competitive effects"); cf. 73 FR at 74782 ("[A]n exchange proposal that seeks to penalize market participants for trading in markets other than the proposing exchange would present a substantial countervailing basis for finding unreasonable and unfair discrimination and likely would prevent the Commission from approving an exchange proposal.").
19
interest in pushing SAPI customers into the higher-cost data-feed segment, in which competing
offerings are more popular. Bunnell 111; see also Disclosure of Payments by Resource Extraction
Issuers, Release No. 67717, 2012 WL 5286931, at *12-13 (Sept. 12, 2012) ("immediate, serious
competitive disadvantage" constitutes irreparable harm).
Bloomberg will also be irreparably injured if it must disclose to NYSE, a corporate sibling
of a direct competitor, its confidentiallist of SAPI customers. As the Commission recognized in
Instinet II, a data vendor should not be required to surrender its confidential customer list to a
competing exchange because "[ c ]ustomer lists are proprietary and often can be extremely valuable
to a vendor's competitors." 1984 WL 472209, at *13. The harm from disclosure, moreover, is
irreparable because once proprietary information is released, its confidentiality and value cannot
be recovered. See Extraction Payments, 2012 WL 5286931, at * 13. A stay is necessary to prevent
CT A from forcing Bloomberg to take this irreversibly harmful step.
III. A Stay Will Not Harm Other Parties
Denial of a stay also "poses a particular danger of irreparable injury to public investors and
members of the securities industry who utilize [SAPI]." Bunker Ramo, 1978 WL 197047, at *5.
In addition to losing SAPI' s technological benefits, McManus 117-11, customers priced out of
SAPI will lose the ability to view and analyze market data through the third-party and proprietary
applications that they have determined best serve their investment decisions. More basic desktop
services sold by Bloomberg and its competitors do not offer a comparable range of benefits and
applications for viewing and analyzing market information, while data feeds like B-PIPE carry
higher subscription costs and significant additional administrative expenses. Bunnell 1118, 30-31.
Furthermore, the technological and administrative expenses associated with switching from SAPI
to another vendor or service represent sunk costs that SAPI customers cannot recover, even if the
proposed amendment were later invalidated. Indeed, switching back to SAPI would entail
20
additional switching costs. Id.133; Extraction Payments, 2012 WL 5286931, at *11 (recognizing
that sunk costs, "once incurred, cannot be recouped even if Petitioners' suit ultimately is
successful").
Conversely, a stay will not harm CTA. CTA has stated it does not know whether the
Amendment will materially increase its revenue. Release 22-24. Nor has it offered evidence
regarding increased costs or the concerns that purportedly animated the 2014 amendment.
Furthermore, CT A apparently has not publicly notified customers of any price change since
publishing the Amendment. Tellingly, it waited more than two years after the 2014 amendment
to propose the changes at issue, and an additional six months after the withdrawal to refile.
IV. A Stay Will Serve the Public Interest
The Amendment abuses CTA's government-sanctioned monopoly over information that
Congress and the Commission have recognized is critical to the investing public. Congress
declared the "public interest" to include ensuring "the availability to brokers, dealers, and investors
of information with respect to quotations for and transactions in securities" and "the practicability
of brokers executing investors' orders in the best market." § 1 lA(a)(l )(C). To advance these
interests, Congress directed the Commission to facilitate the establishment of the national market
system, the "heart" of which are the systems for disseminating consolidated core data. See
§ 1 lA(a); S. Rep. No. 94-75, at 9. The widespread availability of consolidated core data "in a
useful form and on fair and reasonable terms" is "an essential aspect of the Commission's efforts
to facilitate a national market system." Instinet I, 1983 WL 404184, at *5. The proposed
amendment directly contravenes these goals. A 6,000% fee increase on SAPI undoubtedly will
limit the access of investors, funds, and traders to this critical market data in the form that many
small and mid-size firms have found useful and cost-effective. It will impede capital formation by
21
forcing many firms to purchase more expensive market data they do not need, or by entirely
discontinuing the trading supported by SAPI.
The Amendment also reduces incentives to develop innovative market-data services. Tools
such as SAPI-and the third-party and proprietary applications that SAPI supports-entail
significant investments by technology and investment firms in means to deliver, present, and use
market data to provide value to investors. Those firms will continue investing in new technologies
only if motivated by sufficient financial incentives. CT A, however, seeks to exploit its monopoly
position by harvesting the value Bloomberg and other innovators created in developing tools like
SAPI and these third-party applications. See lnstinet 11, 1984 WL 472209, at* 17 ("By providing
subscribers with [ core data] at relatively inexpensive prices, vendors will be encouraged to develop
improved formats for presenting the information," which is a "goal consistent with, and in
furtherance of, the Act's NMS objectives"); id. (finding that "market forces should guide what
displays are offered by vendors" and that "the NASD should not be allowed to influence those
decisions by imposing particular tariffs, unrelated to costs, on different types of displays"). Indeed,
in its 2014 amendment, CTA admitted that the non-display and access fees are designed to
"correspond to the different benefits different categories of users derive from their different uses
of the market data made available under the Plans." 79 FR at 60541.
The broader context of this Amendment is equally disturbing. It is part of a larger trend of
for-profit exchanges raising prices for market data ever higher, thereby exploiting their market
power over data that has both no substitute and highly inelastic demand due to regulatory
constraints. See A Financial System that Creates Economic Opportunities: Capital Markets 63-64
(2017) (noting that "[ c ]ompetitive pressure among broker-dealers and limited constraints on
exchange pricing power has allowed exchanges to regularly raise prices" for market data), at
22
https :/ /vvww. treasury. gov /press-center/press-releases/Documents/ A-Financial-System-Capital
Markets-FINAL-FIN AL. pdf. This trend has led the Treasury Department to recommend that the
Commission scrutinize exchange data fees more closely under § 1 lA and demand greater
transparency from the exchanges. Id. at 63-64; see also Larry Tabb, The Market Data Deathmatch:
The Increasingly Brutal Fight over Equity Market Data Costs, (Jan. 26, 2016) (noting that
exchanges' data-fee revenues from 2011 to 2016 increased 62% due to "large fee increases" and
warning that, "[i]f costs are not reined in, it will almost certainly harm our markets," "leaving
investors with a less liquid and effective market"), at https://research.tabbgroup.com/report/v14-
004-market-data-deathmatch-increasingly-brutal-fight-over-equity-market-data-costs.
The Commission should heed that recommendation here. The Amendment concerns
monopoly data vital to the interests of the investing public. It targets a single Bloomberg service
and its customers with thousands of dollars in increased monthly fees to benefit for-profit
exchanges, including one whose corporate sibling competes with Bloomberg. And it does so by
abandoning, without explanation, CT A's long-standing treatment of SAPI specifically and display
devices generally.
23
CONCLUSION
Given the serious questions raised about the Amendment's lawfulness under § 1 lA, the
Commission should grant a stay to prevent harm to Bloomberg and its customers during
consideration of the Amendment's validity.
Dated: February 6, 2018
24
· Respectfully submitted,
SIDLEY AUSTIN LLP
Michael ~. Warden Benjamin Beaton Daniel J. Feith 1501 K Street, N.W. Washington, D.C. 20005 (202) 736-8000 [email protected]
Counsel for Bloomberg L.P.
UNITED STATES OF AMERICA before the
SECURITIES AND EXCHANGE COMMISSION
In The Matter of:
The Application of Bloomberg L.P.
For Review of Amendments of the CTA Limiting Access to its Services
Admin. Proc. File No. 3-18316
CERTIFICATE OF SERVICE
I hereby certify that on February 6, 2018, I caused a copy of the foregoing Motion for a
Stay of CT A's Fee Amendment to be served by hand on the parties listed below.
Brent J. Fields Secretary U.S. Securities and Exchange Commission 100 F Street, N.E. \1/ashington, D.C. 20549
Dated: February 6, 2018
Douglas W. Henkin Seth T. Taube Joseph Perry Baker Botts LLP 3 0 Rockefeller Plaza New York, NY 10112 [email protected]
Benja
UNITED STATES OF AMERICA before the
SECURITIES AND EXCHANGE COMMISSION
In The Matter of:
The Application of Bloomberg L.P.
For Review of Amendments of the CTA Limiting Access to its Services
Admin. Proc. File No. 3-18316
CERTIFICATE OF COMPLIANCE
Pursuant to Rule 154( d) of the Commission's Rules of Practice, I hereby certify that the
foregoing Motion for a Stay of CT A's Fee Amendment contains 6,986 words, according to the
word-processing system used to prepare the brief, exclusive of the cover page, table of contents,
and table of authorities.
Dated: February 6, 2018
Index
Exhibit
Exchange Act Release No. 34-82071 Tony McManus declaration
A SAPI Customer Guidelines
Keith Bunnell declaration B Bloomberg SAPI brochure
C B-PIPE brochure
D Eikon Server API brochure
Gary Kotovets declaration
E 10-22-04 NYSE Letter to Bloomberg
F 4-18-05 AMEX Letter to Bloomberg
G 9-22-16 Email from NYSE to Bloomberg
H 10-5-16 Email from Bloomberg to NYSE
I 10-14-16 Email from NYSE to Bloomberg . J 11-30-16 Email from NYSE to Bloomberg
K 12-1-16 Email from ICE to Bloomberg
L 3-27-17 Letter from NYSE to Bloomberg
M 4-3-17 Email from Bloomberg to NYSE
N 4-5-17 Email from NYSE to Bloomberg
SECURITIES AND EXCHANGE COMMISSION (Release No. 34-82071; File No. SR-CTA/CQ-2017-04) November 14, 2017 Consolidated Tape Association; Notice of Filing and Immediate Effectiveness of the Twenty-Second Charges Amendment to the Second Restatement of the CTA Plan and the Thirteenth Charges Amendment to the Restated CQ Plan
Pursuant to Section 11A of the Securities Exchange Act of 1934 (“Act”),1 and Rule 608
thereunder,2 notice is hereby given that on October 19, 2017, the Consolidated Tape Association
(“CTA”) Plan participants (“Participants”)3 filed with the Securities and Exchange Commission
(“Commission”) a proposal to amend the Second Restatement of the CTA Plan and the Restated
CQ Plan (“Plans”). The amendment represents the twenty-second Charges Amendment to the
CTA Plan and the thirteenth Charges Amendment to the CQ Plan (“Amendments”). The
Amendments seek to amend the Plans’ fee schedule as well as the Non-Display Use Policy to
clarify the applicability of the non-display fee, the device fee, and the access fee. The
Participants believe that some vendors are mischaracterizing their customers’ usage and creating
artificial loopholes to avoid the Non-Display Use and access fees pursuant to amendments filed
in October 2014 (“2014 Fee Amendments”)4 in an attempt to obtain an advantage over other
vendors. The Participants believe that the distinction between the device fees, the Non-Display
1 15 U.S.C. 78k-1. 2 17 CFR 242.608. 3 The Participants are: Bats BYX Exchange, Inc.; Bats BZX Exchange, Inc.; Bats EDGA
Exchange, Inc.; Bats EDGX Exchange, Inc.; Chicago Board Options Exchange, Incorporated; Chicago Stock Exchange, Inc.; Financial Industry Regulatory Authority, Inc.; Investors Exchange LLC; Nasdaq BX, Inc.; Nasdaq ISE, LLC; Nasdaq PHLX LLC; The Nasdaq Stock Market LLC; New York Stock Exchange LLC; NYSE Arca, Inc.; NYSE American LLC; NYSE National, Inc.
4 See Securities Exchange Act Release No. 73278 (October 1, 2014), 79 FR 60536 (October 7, 2014) (“2014 Fee Amendments”).
2
Use fees, and the access fee was set forth in the 2014 Fee Amendments, and many vendors are
fully complying with that distinction. The Participants state that some vendors appear to be
ignoring the import of the 2014 Fee Amendments in order to gain an advantage over other
vendors, allowing them to profit from new or existing customers by offering them lower fees
than such customers could obtain from vendors who apply the 2014 Fee Amendments correctly.
The Participants state that the proposed amendment is designed to close this loophole by
removing any perceived ambiguity in the 2014 Fee Amendments.5
The Participants previously submitted an amendment to clarify the application of the
Non-Display Use Policy.6 That amendment elicited comment letters, some opposing and some
supporting the amendment.7 The Participants believed that the opposing comments either
misunderstood or misconstrued the purpose and application of that amendment. In order to
provide additional explanation of the reasons behind and the impact of the clarification of the
Non-Display Policy, the Participants withdrew that amendment and are now submitting this
amendment in its place.
5 The Participants would apply this proposed amendment prospectively to meet any
concerns that the existing policy was insufficiently clear. 6 See Securities Exchange Act Release No. 80300 (Mar. 23, 2017), 82 FR 15404 (Mar. 28,
2017). 7 See Letter from David Craig, President, Thomson Reuters, dated April 21, 2017
(“Thomson Reuters Letter”); Letter from Anonymous, dated April 20, 2017; Letter from Jay Froscheiser, VP, DTN/Schneider Electric, dated April 19, 2017; Letter from Melissa MacGregor, Managing Director and Associated General Counsel, SIFMA, dated April 18, 2017 (“SIFMA Letter”); Letter from Greg Babyak, Head of Global Regulatory and Policy Group, Bloomberg, dated April 18, 2017 (“Bloomberg Letter”); Letter from Brad Ward, dated April 17, 2017; Letter from Marcus Mitchell, dated April 17, 2017.
3
In order to correct misinformation regarding the applicability of the Non-Display Use and
access fees, the Participants believe that it is important to clarify that Non-Professional Users8
are not subject to Non-Display Use, access, or device fees, regardless of the type of data product
they receive. Rather, as provided for on the Fee Schedules, the only charge applicable to Non-
Professional Users is the $1.00 monthly charge and this charge is applicable to any use of the
data by a Non-Professional User. While a vendor may make available to a Non-Professional
User a data product that could result in Non-Display Use or access fees being assessed against a
Professional Subscriber, if the subscriber is a Non-Professional User, that Non-Professional User
still would only be subject to the $1.00 monthly charge for such use.9 Therefore, the Participants
believe this proposed amendment will have no effect on the fees paid by Non-Professional Users.
Pursuant to Rule 608(b)(3) under Regulation NMS,10
the Participants designate the
amendment as establishing or changing a fee or other charge collected on their behalf in
connection with access to, or use of, the facilities contemplated by the Plans. As a result, the
amendment becomes effective upon filing with the Commission.
8 As defined in Exhibit B to the Agreement for Market Data Display Services, a Non-
Professional User is “any natural person who receives market data solely for his/her personal, non-business use and who is not a ‘Securities Professional,’” meaning that the person is not (1) registered or qualified with the SEC, the CFTC, any state securities agency, any securities exchange/association, or any commodities/futures contract market/association, (2) engaged in the functions of an investment advisor as those are described in Section 202(a)(11) of the Investment Advisers Act of 1940, or (3) employed by a bank or other organization exempt from registration under Federal or state securities laws to perform functions that would require them to be so registered or qualified if they were to perform such functions for an organization not so exempt. The CTA’s Non-Professional Subscriber Policy can be found at https://www.ctaplan.com/policy.
9 The Administrator will update its reporting process to ensure that Non-Professional Users would continue to be subject to only the $1.00 monthly charge regardless of use or data delivery method to such customer.
10 17 CFR 242.608(b)(3)(i).
4
The Commission is publishing this notice to solicit comments from interested persons on
the proposed Amendments. Set forth in Sections I and II is the statement of the purpose and
summary of the Amendments, along with the information required by Rules 608(a) and 601(a)
under the Act, prepared and submitted by the Participants to the Commission.
I. Rule 608(a)
A. Purpose of the Amendments
1. Background
The 2014 Fee Amendments
The Participants amended the Plans’ fee schedules in October 2014 to establish fees for
Non-Display Uses of data and reduce the device fees assessed on Professional Subscribers.11
The 2014 Fee Amendments responded to long-term changes in data-usage trends. In
formulating the 2014 Fee Amendments, the Participants studied the optimum allocation of fees
among market data users and consulted with industry representatives that sit on the Plans’
Advisory Committee and with other industry participants.
The 2014 Fee Amendments realigned the Plans’ fees more closely with the ways in which
data recipients consume market data. To reflect the changes in consumption of market data, the
Participants reduced the rates that Professional Subscribers paid for each of their display devices
while establishing fees for non-display consumption of data, referred to as Non-Display Use.
For example, among other fee reductions, the Professional Subscriber fee was reduced for
individuals and firms having only one or two devices, with a ten percent decrease in the fees
charged to these subscribers. The other tiered device rates for Professional Subscribers also were
reduced. The monthly device fees currently range from $19 to $45 for Network A and is $23 for
11 See supra note 4.
5
Network B. Additionally, in the 2014 Fee Amendments, the Participants retained the monthly
$1.00 Non-Professional User fee as a cost-effective rate for retail investors.
The 2014 Fee Amendments created Non-Display Use fees in recognition of the
increasingly large amounts of data being made available and the significant value vendors and
their subscribers could derive from using data received in a non-display manner. Non-Display
Use was defined in the 2014 Fee Amendments as any use accessing, processing, or consuming
real-time Network A or Network B quotation information or last sale price information for a
purpose other than in support of a data recipient’s display or further internal or external
redistribution.
The 2014 Fee Amendments provided a non-exhaustive list of examples of Non-Display
Use,12
including:
Trading in any asset class;
Automated order or quote generation and/or order pegging;
Price referencing for algorithmic trading;
Price referencing for smart order routing;
Operations control programs;
Investment analysis;
Order verification;
Surveillance programs; 12 Non-Display Use does not apply to the creation and use of derived data. Derived data is
generally understood by the industry to consist of pricing data or other information that is created in whole or in part from consolidated quotation or last sale price information, but which cannot be reverse engineered to recreate such information or be used to create other data that is recognizable as a reasonable substitute for such information. For instance, using consolidated quotation information or last sale price information to value portfolios or create indexes would not be considered Non-Display Use.
6
Risk management;
Compliance; and
Portfolio Valuation.
The Participants established three categories of Non-Display Use of market data:
Category 1 applies when a data recipient makes Non-Display Use of real-time
market data on its own behalf.
Category 2 applies when a data recipient makes Non-Display Use of real-time
market data on behalf of its customers.
Category 3 applies when a data recipient makes non-display uses of real-time
market data for the purpose of internally matching buy and sell orders within an
organization.
The Non-Display Use Fee is $2,000 per category for Network A and $1,000 per category
for Network B. Data recipients can be charged for each of the three categories of Non-Display
Use they utilize. Importantly though, if a data recipient makes Non-Display Use of real-time
market data on behalf of its customers (a Category 2 use), its customers are not charged the
Category 2 Non-Display Use fee or the access fee. Instead, the data recipient (who in this
example could be a broker-dealer using the data for smart order-routing) is charged the Category
2 Non-Display Use fee once and is charged the access fee once, but its customers are not charged
either fee for the Non-Display Use by the broker-dealer on their behalf. Category 3 is the only
Non-Display Use fee that can be charged multiple times; that possibility arises only if a
subscriber operates more than a single ATS, exchange, or ECN, and the fee is charged once per
ATS, exchange, or ECN.
7
Access Fees
CTA currently charges an access fee to any subscriber with access to data feeds. This fee
is charged based on the receipt of data, rather than how the data is used. If a subscriber is
receiving a data feed, i.e., information transmitted in a format that is not controlled or can be
manipulated and integrated into their own systems, that subscriber is subject to access fees.
Access fees are therefore distinct from the separate charges on the Fee Schedule that are based on
how the data is used, including device fees and Non-Display Use fees.
Mischaracterization of Usage by Certain Vendors
Following the 2014 Fee Amendments, the Participants became aware that certain vendors
were characterizing the usage of their customers as subject to solely the device fees despite the
fact that the vendors were not delivering the data in a controlled format. Rather, the data was
being delivered in a format that enabled their customers to integrate the data into their own
systems and software for Non-Display Use. The Participants understand that certain vendors use
this characterization to offer their customers the ability to avoid the non-display and access
charges due under the Plan to the detriment of other vendors who properly characterized how
they delivered the data as being subject to access fees and their customers’ usage as being subject
to the Non-Display Use fees. The Participants believe that this characterization is clearly
contrary to the language and purpose of the 2014 Fee Amendments.
It is important, therefore, to understand the different types of data products that can be
provided by a vendor, generally falling into two categories.
The first category consists of data distributed in a form that only enables it to be visibly
displayed on a device such that the data recipient can only see the consolidated quotation and last
sale information without being able to integrate the data into the recipient’s own systems and
8
software; the proposed amendment will have no effect on what users of this type of product pay.
The device fee contemplates that once that data has been visibly displayed via a graphical user
interface, it can be exported via a data delivery exchange to a format such as Excel for further
display use. For example, for a Professional Subscriber, use of Bloomberg’s Excel add-in
features, would be subject to the existing device fee, currently set at a maximum of $45 per unit,
and would not be considered Non-Display Use. As described above, this category would not
subject a subscriber to any access fees.
The second category consists of data being provided to a subscriber in a format that
enables the subscriber to incorporate the data into the data recipient’s systems and software. This
type of subscriber is essentially doing through a vendor what it could do if the subscriber
accessed data directly from CTA: The vendor is functionally acting as a pipe through which the
data is delivered to the subscriber. This type of delivery of data is subject to access fees, and,
depending upon usage, non-display fees.
The Participants are concerned that certain vendors are providing subscribers with a level
of access to market data that allows the subscriber to use the market data for Non-Display
purposes, yet those vendors are not reporting that delivery of data as a data feed.13 The
Participants understand that vendors failing to properly report are taking advantage of
13 The CTA Network Administrator requires all customers and vendors that wish to receive
market data via an uncontrolled data feed to complete an Exhibit A, available here: https://www.nyse.com/publicdocs/ctaplan/notifications/trader-update/Exhibit%20A%20-%20CTA%20-%20Internal%20and%20External%20Distribution.pdf. Among other information, vendors that redistribute data must report data feeds provided to subscribers. Any subscriber that makes a non-display use of CTA or CQ data must then complete a Non-Display Use of CTA/CQ Market Data – Customer Declaration, which is available here: https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader- update/CTA%20Non%20Display%20Declaration%20Form.pdf.
9
understandings of use that pre-dated the 2014 Fee Amendments by continuing to report that their
customers were subject only to the lower device fees rather than as data feeds applicable to Non-
Display Use and access fees that others were paying in accordance with the existing fee schedule.
In other words, those vendors are not applying the 2014 Fee Amendments, but rather continuing
to report what constitutes a data feed delivery and non-display use as a device use only. This
misinterpretation of the 2014 Fee Amendments has not only upset the balance struck by the
Participants in the 2014 Fee Amendments between who should be subject to the device fees
versus the Non-Display Use fees, it has also upset the competitive balance among vendors. The
Participants are filing this proposed amendment in order to definitively remove any ambiguity
with regards to the applicability of the Non-Display Use and access fees to eliminate this
imbalance.
In connection with the previously submitted amendment regarding Non-Display Use,
certain commenters raised concerns about a potential increase in the price of a particular data
product being offered in the marketplace, the Bloomberg Server Application Program Interface
product (“Bloomberg SAPI”). Bloomberg argued that those using the Bloomberg SAPI should
not be subject to the Non-Display Use and access fees because the output of the server-based
application is displayed to users whose device or user ID has been entitled by Bloomberg.14 But
Bloomberg’s focus solely on how the data might be disseminated by some SAPI users is
misplaced and exemplifies the issue that the Participants are attempting to resolve with this
proposed amendment.
As described above, the access fee is charged to those data recipients who obtain data in a
manner that enables the recipient to integrate that data into their own systems or software,
14 See Bloomberg Letter at 4-5.
10
regardless of whether and how the recipient chooses to use that data. And the Non-Display Use
fee is applicable whenever data is used in a manner that does not make the data visibly available
to a data recipient on a device. This is exactly what Bloomberg concedes the Bloomberg SAPI
permits when Bloomberg states that the Bloomberg SAPI allows customers to run server-based
applications on market data. For example, when Bloomberg first reported use of the Bloomberg
SAPI service to the Network Administrator, Bloomberg represented that “[s]ubscribers to
Bloomberg’s API service typically use the application for the following purposes: pricing
engines, portfolio valuations, order management programs, risk compliance engines, and
program trading applications.”
Prior to 2014, such use was subject to device fees but only because Non-Display Use fees
did not exist. However, consistent with the 2014 Fee Amendments, any such use constitutes
Non-Display Use according to the definitions that went into effect in 2014 and should be subject
to the Non-Display Use and access fees; the provision of such data via the Bloomberg SAPI does
not obviate that fact. Use of encryption or entitlements are not designed to restrict such use
because they only control access to the data, not use of the data, and it is the latter that
determines whether Non-Display Use and access fees apply.
SIFMA, in its letter commenting on the previous proposed amendment, also focused on
the applicability of the Non-Display Use and access fees on Bloomberg’s SAPI. But SIFMA
mischaracterized the Bloomberg SAPI as “the quintessential display product.”15 While
Bloomberg has a display product, i.e., Bloomberg Terminal, the functionality made available by
the Bloomberg SAPI is not at its core a display product. The ability to integrate consolidated
quotation and last sale information into a data recipient’s “server-based applications” clearly
15 See SIFMA Letter at 2.
11
demonstrates the incongruence between SIFMA’s description and the Bloomberg SAPI data
product’s overall functionality. Customers that choose to subscribe to both the Bloomberg
Terminal and the Bloomberg SAPI presumably are doing so because they are using the data for
purposes other than just display of the data. Indeed, the Participants understand that is why
Bloomberg charges its subscribers substantial amounts for the Bloomberg SAPI over and above
the amounts Bloomberg charges for use of one its terminals alone. If in fact a customer only
needs the display features, which would include use of Excel add-in features, such a customer
would not need the Bloomberg SAPI. The customer could end its use of the Bloomberg SAPI
and then would not be subject to Non-Display Use or access fees. For the avoidance of doubt, a
hypothetical Bloomberg customer that only used Bloomberg Terminals and not the Bloomberg
SAPI would not be affected in any way by the proposed amendment. Bloomberg itself implicitly
conceded this: although it rents out more than 300,000 terminals, it claimed the previous
proposed amendment would impact only “hundreds” of its customers.16
B. Proposed Amendments to Plans’ Fee Schedules
1. Amended Definition of Non-Display Use
To distinguish between the two categories of use of data, the Participants are proposing to
amend the definition of “Non-Display Use” in footnote eight of the Plans’ fee schedules to
explicitly state that any use of data that does not make data visibly available to a data recipient
on a device is a Non-Display Use. The Participants are proposing to make a parallel amendment
to footnote two of the Plans’ fee schedules to state that the device fee will only be applicable
16 Compare Bloomberg website touting 325,000 global terminal subscribers,
https://www.bloomberg.com/company/bloomberg-facts/ with Bloomberg Letter at 1 (claiming that “hundreds” of customers would be affected).
12
where the data is visibly available to the data recipient; any other data use on a device will be
considered Non-Display Use.
In the 2014 Fee Amendments, the Participants recognized the relative values of non-
display versus display data usage. With the proliferation of automated and algorithmic trading,
non-display uses consume large amounts of data and perform a wide variety of functions. The
black boxes and application programming interfaces utilized by these firms process data far more
quickly, and as a result, the relative value between non-display and display data usage is
pronounced. The disparity in value between non-display and display data usage led the
Participants to decrease the Professional Subscriber device charges in the October 2014 Non-
Display Filing while establishing the Non-Display Use fees. However, if a vendor distributes
data for Non-Display Use but reports that its subscribers are subject only to device fees, such
interpretation would disrupt the balance struck by the Participants in lowering the device fees
while establishing the Non-Display Use fees.
The Participants believe that amending the fee schedule will create a clear understanding
of when the Non-Display Use fee is applicable. The Participants believe that the proposed
amendment is consistent with the 2014 Fee Amendments and therefore would clarify the change
made by the 2014 Fee Amendments.
To notify data recipients of the amended definition, the Participants will be updating the
CTA Market Data Non-Display Use Policy. The CTA Market Data Non-Display Use Policy
describes the applicability of the Non-Display Use fee to specific uses of real-time Network A
and Network B last sale information and quotation information. The CTA Market Data Non-
Display Use Policy currently reflects the applicability of the Non-Display Use fee as established
by the 2014 Fee Amendments. The Participants are amending this policy to include the updated
13
definition of Non-Display Use as reflected in the Plans’ amended fee schedules. The CTA
Market Data Non-Display Use Policy is also being updated to specify that Redistributors that
provide market data to their customers and/or data recipients for Non-Display Use of the data
must submit an access request to the Administrator, and must require that the customers and data
recipients of such market data complete an Exhibit A for the data use request.17
The Participants are also amending footnote two and footnote eight of the Plans’ fee
schedules to make clear that the Participants reserve the right to make the sole determination as to
whether a data recipient’s use is subject to the Non-Display Use fee or the device fee and, if
subject to the Non-Display Use fee, the category of such Non-Display Use, consistent with the
2014 Fee Amendments and this amendment.
2. Amended Definition of Access Fee
To further clarify that the applicable fees that would be assessed are based on how data is
used, the Participants are proposing to amend footnote ten of the Plans’ fee schedules to clarify
when the access fee is applicable. The access fees for Network A range from $750 to $1,750 and
for Network B range from $400 to $1,250. The Participants are not proposing to modify the
current access fees. Instead, the Participants are proposing to amend footnote 10 in the Plans’ fee
schedules to provide the access fee would be applicable if: (1) the data recipient uses the data for
non-display; or (2) the data recipient receives the data in such a manner that the data can be
manipulated and disseminated to one or more devices, display or otherwise, regardless of
encryption or instructions from the redistribution vendor regarding who has authorized access to
the data. In other words, if a subscriber has access to the data in a manner that enables that
17 Exhibit A can be found on the Plans’ website at
https://www.nyse.com/publicdocs/ctaplan/notifications/trader- update/Exhibit%20A%20-%20CTA%20-%20Internal%20and%20External%20Distribution.pdf.
14
subscriber to engage in Non-Display Use of the data, the subscriber should be subject to the
access fee. This amendment would make clear that the fees are based on the level of
functionality made available by the vendor rather than any particular method of transmission that
could potentially be modified to avoid the access fees. The Participants believe that this
proposed amendment is consistent with how access fees are currently charged and would remove
any ambiguity for subscribers.
For example, if a subscriber is receiving a stream of consolidated quotation and last sale
information from a vendor, and that stream of data can then be used by the subscriber as an input
into its own systems and software, then the subscriber will be subject to the access fee because it
is able to make Non-Display Uses of the data. Additionally, if a subscriber is able to access a
vendor’s servers, choose what data to download onto its own system, and then incorporate that
data into the subscriber’s system and software, then the subscriber will be subject to the access
fee. If, however, a subscriber is accessing a platform provided by a third-party where the data is
being incorporated into and manipulated by the third-party’s software, then the subscriber
accessing that platform will not be subject to the access fee; instead, the third-party software
provider will be subject to the access fee.
This proposed amendment is designed to make the applicability of the access fee depend
upon the functionality made available by a vendor rather than get into a technical discussion of
whether a form of transmission constitutes a “data feed” per se. In essence, if the data is delivered
in a format that allows for non-display use, then such data delivery is tantamount to a data feed
because it is a delivery format that is not controlled either in the entitlements or how the data is
displayed. This approach to defining the applicability of the access fee will ensure that vendors
that are providing the same level of functionality to their subscribers are not permitted to charge
15
differing fees. As a result, the Participants believe that the revised definition will place all vendors
on an equal footing so as to maintain a balanced, fair, and equitable competitive landscape.
3. Limited Scope of Proposed Amendment
So as to avoid any misplaced concern, the Participants reiterate that the Non-Display Use
and access fees are not applicable to a Non-Professional User, and therefore the proposed
amendments are not applicable to Non-Professional Users. As previously stated, the 2014 Fee
Amendments established fees for Non-Display Uses of data and reduced the device fees assessed
on Professional Subscribers. Therefore, regardless of whether a Non-Professional User is
receiving a data product that could be subject to the Non-Display Use and access fees, a Non-
Professional User’s vendor would only be charged $1.00 for the data product being made
available to a Non-Professional User.18 While the Participants cannot control the pricing charged
by vendors for usage of the vendors’ data products, such Non-Professional User’s fees would not
change in any way as a result of this proposed amendment.
Further, it is important to note the distinction between the fees charged to a brokerage
platform that receives data and uses it for multiple purposes (including providing displays to its
customers) versus the fees charged to display-only users who simply access that platform to view
the data. Although it is true that the firms providing these types of platforms could be charged
Non-Display Use and access fees because of their receipt and use of data for multiple purposes,
that does not mean that the customers of such a platform would be charged the same fees. If a
18
Unlike Professional Subscribers, Non-Professional Users are not directly billed by the Network Administrator, but instead the vendors providing the quotation and last sale information to Non-Professional Users are billed for any usage. The fee schedule states as much in connection with the Non-Professional User fee. None of the other fees contain this reference to charging vendors for use by Non-Professional Users because such users are not charged those fees.
16
customer has access to uncontrolled data on a platform, then the firm running the platform would
be charged an access fee. Additionally, if the platform made Non-Display Use of that data, then
the firm would also be charged a Non-Display Use fee, and if the use was on behalf of both itself
and its customers, it would be charged a Category 1 and a Category 2 Non-Display Use fee.
However, customers accessing that display platform only to view the data would not be
charged either the Non-Display Use fee or the access fee. As such, even if the platform had 500
users, the firm providing the platform would be charged only once for its Non-Display Use on
behalf of its customers, but the customers would not be individually assessed the Non-Display
Use or access fees. Instead, a Professional Subscriber would be charged at most $45 per unit for
accessing the firm’s platform.
B. Governing or Constituent Documents
Not applicable.
C. Implementation of the Amendments
Pursuant to Rule 608(b)(3)(i) under Regulation NMS, the Participants have designated
the proposed clarification as establishing or changing fees and are submitting the amendment for
immediate effectiveness.
D. Development and Implementation Phases
See Item C above.
E. Analysis of Impact on Competition
The amendments proposed herein do not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Securities Exchange Act of 1934
(the “Act”). Additionally, the Participants do not believe that the proposed amendments
introduce terms that are unreasonably discriminatory for the purposes of Section 11A(c)(1)(D) of
17
the Act. The Participants have submitted this amendment to simply clarify the applicability of
the Non-Display Use and access fees established in the 2014 Fee Amendments.
As explained in the 2014 Fee Amendments, the Non-Display Use fees were established in
response to the proliferation of the use of data for dark pools and other non-display trading
applications. In conjunction with the establishment of Non-Display Use fees, the Participants
reduced the rates for Professional Subscriber display devices in hopes of fostering the
widespread availability of real-time market data. At the same time, the Non-Display Use fees
allowed those who make Non-Display Uses of data to make appropriate contributions to the
costs of collecting, processing, and redistributing the data. The clarification proposed herein
maintains the balance struck by the Participants in reducing the device fee while establishing the
Non-Display Use fees.
Additionally, the Participants believe that the amendment will have a positive effect on
competition because the amendment will ensure that all vendors are classifying their customer’s
usage in the same manner. Following the 2014 Fee Amendments, the Participants believe that
certain vendors have been mischaracterizing the usage of their customers as being subject solely
to the device fees despite the fact that the data was being delivered in an uncontrolled form that
enabled their customers to integrate the data into their own systems and software for Non-
Display Use. This mischaracterization led to certain vendors offering their customers lower fees,
to the detriment of other vendors who properly characterized their customers’ usage as subject to
the Non-Display Use and access fees. By eliminating the ambiguity in the Plans’ fee schedules,
the Participants believe that all vendors will be subjected to and subject their customers to similar
fees for similar uses of data.
18
Without detailed information from vendors,19
the Participants are unable to calculate the
actual number of subscribers that are going to be affected by the proposed amendment; however,
due to the limited application of the Non-Display Use and access fees, the Participants believe
that the change will not be widespread. First, the proposed amendment would have no effect on
Non-Professional Users regardless of the type of data product the Non-Professional User was
receiving; such users would only be charged $1.00 for use of market data. Second, the
Participants believe that some users might be receiving a data product in a format that provides a
level of access to data that they do not need based on how they are using the data. If a subscriber
were not making Non-Display Uses of market data, then such subscriber would not need the
enhanced service and could switch to a display-only data product that would be subject to the
lower device fees. Because the subscriber was not making Non-Display Uses of the market data,
the switch would cause the subscriber to be in exactly the same position as it is today – it would
be able to continue using the market data in the same manner as it previously viewed it while
paying only the device fee. Finally, the Participants believe that only a small number of vendors
are not correctly reporting their customers’ usage of data, and this proposed amendment is
intended to close an unintended loophole that certain vendors are exploiting.
In connection with the previously proposed amendment, Bloomberg claimed that the
proposal was an unfair burden on competition because Bloomberg is “asked to disclose all of its
customers to the Exchange, including the specific method by which they consume data.”
Bloomberg claimed that such a request is to obtain “confidential information under the guise of
the SRO cloak,” implying that this information will be used to market exchanges’ proprietary
19 As previously mentioned though, Bloomberg, in its comment letter on the previously filed
amendment, stated that although it rents out more than 300,000 terminals, it only claimed the proposed amendment would impact “hundreds” of its customers.
19
data products.20 As described above, however, this data is already required by the administrator
as a necessary part of its administrative functions to be able to audit fees billed to data users, and
is not being requested by an individual exchange for its own benefit. As it always has been the
case, other than non-professional subscribers, the administrator directly bills customers of
vendors that have been reported by a vendor as a professional device user or using the data for
non-display purposes. As a result, the information being requested is necessary to carry out the
administrator function. Direct billing, and therefore the need for this information, long predates
even the 2014 Fee Amendments. It is unclear why Bloomberg and other commenters believe
that the proposed amendment has anything to do with this longstanding (and heretofore
unchallenged) requirement.
Moreover, the administrator is subject to information barriers which prevent it from
disclosing confidential customer information with the exchange’s business units.
F. Written Understanding or Agreements relating to Interpretation of, or Participation in, Plan As previously stated, the Participants have amended the CTA Market Data Non-Display
Use Policy to implement the proposed Amendments. A copy of the changes to the Non-Display
Use Policy is attached to the Amendment.
G. Approval by Sponsors in Accordance with Plan
Section XII (b)(iii) of the CTA Plan provides that "[a]ny addition of any charge to . . . the
charges set forth in Exhibit E . . . shall be effected by an amendment to this CTA Plan . . . that is
approved by affirmative vote of not less than two-thirds of all of the then voting members of
CTA. Any such amendment shall be executed on behalf of each Participant that appointed a
20 Bloomberg Letter at 8.
20
voting member of CTA who approves such amendment and shall be filed with the SEC.”
Further, Section IX(b)(iii) of the CQ Plan provides that “additions, deletions, or modifications to
any charges under this CQ Plan shall be effected by an amendment . . . that is approved by
affirmative vote of two-thirds of all the members of the Operating Committee.”
The Participants have executed this Amendment and represent not less than two-thirds of
all of the parties to the Plan. That satisfies the Plans' Participant-approval requirements
H. Description of Operation of Facility Contemplated by the Proposed Amendments Not applicable. I. Terms and Conditions of Access
Not applicable. J. Method of Determination and Imposition, and Amount of, Fees and Charges
1. In General
The Participants took a number of factors into account in deciding to propose the
amendments contained herein. First, the administrator works closely with vendors and customers
to assess and analyze the different methods by which vendors make data available to their
customers. The Participants have determined that certain vendors are providing non-display
functionality via their market data products but nevertheless are reporting that their customers are
only subject to the lower display device charges based on a skewed reading of the Non-Display
Use and access fees.
Significantly, the Participants discussed their findings with the Advisory Committee. The
Advisory Committee includes a representative of a broker-dealer with a substantial retail
investor customer base, a broker-dealer with a substantial institutional investor customer base,
an alternative trading system, a data vendor, and an investor. It also includes other industry
21
representatives having deep market data experience. The Advisory Committee members
attended and participated in meetings of the Participants in which the proposed amendment was
discussed in length. During these meetings, no Advisory Committee member voiced an
opposition to the proposed amendment, and some were quite vocal in their support of the need to
level the competitive imbalance that currently exists as a result of the misinterpretation by
certain vendors of the Non-Display and access fees.
2. The Proposed Amendment Will Have No Impact on Most Individual Investors.
Non-Professional Users (i.e., individual investors) will not be impacted by the proposed
amendment. As described above, Non-Professional Users are not subject to Non-Display Use,
access, or device fees, regardless of the type of data product they receive. Rather, as provided
for on the Fee Schedules, the only charge applicable to Non-Professional Users is the $1.00
monthly charge and this charge is applicable to any use of the data by a Non-Professional User.
Therefore, this proposed amendment will have no effect on the fees paid by Non-Professional
Users.
3. Vendor Fees
Fees imposed by data vendors (which the Commission does not regulate), rather than the
fees imposed under the national market system plans account for a significant majority of the
global market data fees incurred by the financial industry. Market data vendors may
significantly mark-up national market system fees or incorporate that data into the vendors’ own
market data products. The fees the market data vendors charge are not regulated and there is
limited transparency into how their rates are applied. In any event the vendors’ fees do not result
in any additional revenues for the Participants; the vendors alone profit from them.
22
4. The Proposed Amendment Resolves the Inequitable Application of Non-Display Use and Access Fees as a Result of the Misinterpretation.
The Participants believe that the proposed amendment is fair and reasonable and provides
for an equitable allocation of dues, fees, and other charges among vendors, data recipients and
other persons. This proposed amendment is not motivated by a plan to increase fees or revenues,
but rather to ensure that the 2014 Fee Amendments are applied correctly and consistently by all
vendors. In a perfect world, this proposed amendment would not result in any changes to revenue
because data recipients are already be subject to the 2014 Fee Amendments and they should be
reporting usage correctly. However, as the Bloomberg Letter exposes, there is at least one vendor
(Bloomberg) that has not been accurately reporting its Bloomberg SAPI product.
For the reasons discussed below, the Participants cannot conduct a precise analysis of
what changes to revenue would accrue if this amendment were to go into effect. Indeed, to date,
the administrator cannot project whether this proposed amendment would result in any revenue
changes because it is not known whether, and how many, vendors are not accurately reporting
usage. The Participants are therefore unable to forecast what revenue increase, if any, may result
from the proposed amendment, because only those vendors utilizing a misinterpretation of the
2014 Fee Amendments have the information necessary to enable the Participants to calculate the
effects of closing the perceived loophole.
Nevertheless, the Participants have done a general analysis, as described below, based
upon the comments received on the prior proposal. Specifically, as demonstrated by the
Bloomberg comment, we know that at least one vendor is not reporting correctly and it has
refused to provide information to the administrator. However, Bloomberg acknowledges in its
letter that if it correctly applied the 2014 Fee Amendments, “hundreds” of its customers would be
affected.
23
Because Bloomberg has refused to provide any information, the Participants have no way
of knowing whether 200 customers or 999 customers would be impacted, or somewhere in
between. In addition, some of these customers may only need to receive the data in a display
format and therefore not be impacted at all. Regardless of the actual number of Bloomberg
customers, there would not be a one-to-one correlation between the number of customers
receiving CTA/CQ data over the Bloomberg SAPI and the number of additional access fees and
Non-Display Use fees that would be charged if Bloomberg correctly reported its customers’
usage. Specifically, Bloomberg is likely currently reporting those “hundreds” of data recipients
as Professional Device Users, which means the customer that Bloomberg is referring to is in fact
a person as opposed to a firm. A customer firm of Bloomberg may subscribe multiple times to
the Bloomberg SAPI feed for its individual users. In that case, because access fees and Non-
Display Use fees are charged once at a firm level, that Bloomberg customer firm would likely be
subject to a single access fee and Non-Display Use fee for multiple Bloomberg SAPI
connections. Moreover, a Bloomberg firm customer that subscribes to the Bloomberg SAPI may
already be paying an access fee and Non-Display Use fees, in which case, correctly reporting the
Bloomberg SAPI as a data feed would not result in any additional fees to such customer.
Additionally, the Participants believe that many data users that are currently taking high-priced
vendor products such as Bloomberg’s SAPI, providing what is for those users unnecessary
functionality, may switch to other products so as to avoid having to pay any additional charges
they may face once the non-display functionality is accurately reported. Any such switch will
reduce any potential revenue increase resulting from the clarification. In sum, although the
Participants are aware of certain vendors inaccurately reporting data usage, they do not believe
that there has been a widespread misinterpretation of the 2014 Fee Amendments. Accordingly,
24
the Participants generally do not believe that this proposed amendment would result in a material
increase in revenue.
More importantly, however, the Participants are concerned about the possible
consequences of failing to close this perceived loophole. In particular, the level of access
provided by the misreported products is roughly equivalent to that provided by the products
offered by vendors reporting accurately. Yet, those vendor’s customers are not paying what other
vendor’s customers pay for the similar services. In order to maintain the competitive balance, it
is likely that, absent the clarification, the market vendors that are now accurately reporting may
feel compelled to take advantage of this perceived loophole to reduce their competitors’ untoward
advantage, and, if they do so, this may reduce the market data revenue pool available to the
Participants. The failure to close this perceived loophole therefore could result in substantial
disruptions to the market data funding mechanism.
K. Method and Frequency of Processor Evaluation
Not applicable.
L. Dispute Resolution
Not applicable.
II. Rule 601(a)
A. Equity Securities for which Transaction Reports Shall be Required by the Plan
Not applicable.
B. Reporting Requirements
Not applicable.
C. Manner of Collecting, Processing, Sequencing, Making Available and Disseminating Last Sale Information
Not applicable.
25
D. Manner of Consolidation
Not applicable.
E. Standards and Methods Ensuring Promptness, Accuracy and Completeness of Transaction Reports
Not applicable
F. Rules and Procedures Addressed to Fraudulent or Manipulative Dissemination
Not applicable.
G. Terms of Access to Transaction Reports
Not applicable. H. Identification of Marketplace of Execution
Not applicable.
III. Solicitation of Comments
The Commission seeks comment on the Amendments. In particular, the Commission seeks
comment on, among other things: (1) whether the impact of the 2014 CTA/CQ Fee
Amendments on market data users has been consistent with the representations of the
Participants; (2) the number of market data users that would be impacted by these Amendments;
(3) the impact these Amendments would have on, for example, the fees paid by market data
users; and (4) whether the Amendments would have a disproportionally greater impact on certain
segments of users (e.g., small and midsize trading firms). Interested persons are invited to
submit written data, views, and arguments concerning the foregoing, including whether the
proposed Amendments are consistent with the Act. Comments may be submitted by any of the
following methods:
Electronic comments:
Use the Commission’s Internet comment form (http://www.sec.gov/rules/sro.shtml); or
26
Send an e-mail to [email protected]. Please include File Number SR-CTA/CQ-
2017-04 on the subject line.
Paper comments:
Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange
Commission, 100 F Street, NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CTA/CQ-2017-04. This file number should be
included on the subject line if e-mail is used. To help the Commission process and review your
comments more efficiently, please use only one method. The Commission will post all comments
on the Commission’s Internet website (http://www.sec.gov/rules/sro.shtml). Copies of the
submission, all subsequent amendments, all written statements with respect to the Amendments that
are filed with the Commission, and all written communications relating to the Amendments
between the Commission and any person, other than those that may be withheld from the public in
accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing
in the Commission’s Public Reference Room on official business days between the hours of 10:00
am and 3:00 pm. Copies of the Amendments also will be available for inspection and copying at
the principal office of the CTA.
27
All comments received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CTA/CQ-2017-04 and should be submitted on or
before [insert date 21 days from publication in the Federal Register].
By the Commission.
Brent J. Fields Secretary
1
UNITED STATES OF AMERICA before the
SECURITIES AND EXCHANGE COMMISSION
In The Matter of: The Application of BLOOMBERG L.P. For Review of Amendments of the Consolidated Tape Association Limiting Access to its Services
Admin. Proc. File No. 3-18316
DECLARATION OF TONY MCMANUS
I, Tony McManus, declare as follows:
1. I submit this declaration in support of Bloomberg L.P.’s Motion to Stay CTA’s
Fee Amendment. Since November 2012, I have served as the global business head for real time
feeds, platform technology, and service delivery for Bloomberg L.P. (“Bloomberg”).
2. Before joining Bloomberg, I worked for NYSE Euronext for five years, including
as its managing director for the NYSE Technology Centre of Excellence and as the global
business head for enterprise software. Earlier in my career, I developed trading programs for a
large international financial institution. I received a Masters in Science in Information Systems
in 1997 from the University of Portsmouth in the U.K.
3. Among the products and services I am responsible for in my current role are
Bloomberg’s Server Applications Program Interface (“SAPI”) service and its Market Data Feed,
known as B-PIPE. My responsibilities include overseeing product development, customer
support, and business management for these products and services. I make this declaration based
on my personal knowledge, discussions with colleagues, and Bloomberg’s corporate records.
2
A. Bloomberg’s Market-Data Services
4. Bloomberg, like competing market data vendors, offers real-time market data in
two basic ways: display services and data feeds.
a. Display services: Bloomberg supplies data to devices that display the data to
human users on a screen through an application. The Bloomberg Terminal is
a software tool that displays real-time data, news, and analytics to authorized
Bloomberg subscribers on approved devices.1 In connection with their
Terminal subscription, Bloomberg subscribers may purchase the Server
Applications Program Interface (“SAPI”) at issue in this proceeding. SAPI
supplies real-time market data, and/or data derived from real-time market data
(“derived data”), for display on the same devices on which subscribers view
the Bloomberg Terminal. SAPI delivers market data to a customer’s central
server for distribution to the display devices of authorized Bloomberg
Terminal users, as verified by Bloomberg’s centrally controlled entitlement
system. SAPI subscribers view market data (and data derived from market
data) on their devices through third-party applications or their firm’s own
proprietary applications. Bloomberg tightly controls access to the market data
and derived data that SAPI provides. To view the data, a subscriber must be
logged into the Bloomberg Terminal, which requires the subscriber to provide
a unique alphanumeric identifier and biometric authentication. Bloomberg’s
systems then verify that the subscriber is entitled to view the requested market
1 Although the Bloomberg Terminal is still available in its original hardware form, the software version is far more widely used.
3
data. Data is then delivered only to the device on which the subscriber is
logged into the Bloomberg Terminal.
b. Data feeds: Bloomberg supplies data-feed customers, by contrast, with a
stream of data they may access however they want, including in ways that
require no human intervention, such as automated, algorithmic, or “black box”
trading. Bloomberg’s B-PIPE data feed delivers higher volumes of data than
SAPI allows, without the usage restrictions that SAPI imposes. B-PIPE
customers may use data for black box trading and other activities that are
never displayed on a screen. Unlike Bloomberg’s display products, the B-
PIPE data feed is not tied to subscriptions for individual users, but may be
used by anyone across an entire firm regardless of whether they have a
Bloomberg Terminal subscription or log into a particular device. As a result,
with B-PIPE the firm, rather than Bloomberg, controls which individuals may
access what data.
5. In the amendment to the CTA and CQ national market system plans that is at
issue in these proceedings, see SEC Release No. 34-82071 (“Amendment” or “Release”), the
NYSE-led Consolidated Tape Association (“CTA”) claims that SAPI (1) uses market data for
non-display purposes and (2) delivers data to subscribers in an uncontrolled format tantamount to
a data feed. Both of these claims are wrong, as demonstrated by the basic differences between
SAPI and B-PIPE outlined above. SAPI market data and derived data may be accessed only (1)
on a display device, (2) on which the user is simultaneously logged into the Bloomberg
Terminal, (3) through a graphical application, (4) by a properly authenticated and entitled human
user. B-PIPE, by contrast, is a data feed that may be used (1) on any kind of device, (2) by any
4
person irrespective of whether they are Bloomberg Terminal subscribers, and (3) for any number
of automated, algorithmic, high-frequency, or black box trading applications that never
graphically display the data.
B. SAPI Is a Display Service
6. SAPI delivers real-time market data to display devices via a firm’s central server,
instead of directly to the display device, as happens with the Bloomberg Terminal. The display
devices receiving the data are verified by Bloomberg’s centrally controlled entitlement system.
This choice of delivery method is minimally (if at all) apparent to the end user. With both SAPI
and the Bloomberg Terminal, the same market data reaches the screens of the same authenticated
users, who may use it only through display applications.
7. SAPI’s server-based system for delivering information to display devices
nevertheless offers several advantages over a direct-to-desktop approach. None of these
advantages, however, supports CTA’s assertion that SAPI allows customers to use data for
purposes other than display. See Release 11.
8. First, the server-based arrangement enhances efficiency by allowing customers’
SAPI applications to receive data through one download to a central server, instead of redundant
downloads to individual devices. This reduces data consumption by allowing individual users to
access the same data on the firm’s server. This advantage is effectively invisible to end users.
9. Second, by downloading data to a single server and then distributing it to users’
authorized devices, rather than delivering the data to the devices directly, SAPI ensures that
different applications receive consistent, uniform data.
10. Third, users of SAPI can view the data through applications that reside on a server
but are displayed on the users’ devices alongside the Bloomberg Terminal. These display
5
applications, which may be acquired from approved third-party vendors or developed in-house
on a proprietary basis, allow Bloomberg Terminal users to view, analyze, and act on the market
data delivered through SAPI. All applications compatible with SAPI must have graphical user
interfaces that visibly display the market data (or derived data). Bloomberg works with
customers and with third-party vendors to ensure that applications displaying SAPI data comply
with Bloomberg controls.
11. Fourth, delivering the data to a central server that services the display applications
streamlines technological maintenance and control for SAPI customers. This configuration
allows firms to upgrade or modify software through a central server rather than on each
individual device.
12. CTA states that “a customer would not need the Bloomberg SAPI” if it “only
needs the display features.” Release 11. This is incorrect. One of the main benefits of SAPI is
the ability to deliver data to third-party and proprietary applications that display the data on the
same device as the Bloomberg Terminal, but are not offered directly by Bloomberg. Order-
management systems from vendors such as Eze Castle are popular display applications that use
SAPI to display data to Bloomberg Terminal users. CTA’s conclusion that SAPI customers must
be using data for non-display purposes is at odds with customers’ actual, authorized use of SAPI.
13. Relatedly, the Amendment states that unlike the Bloomberg Terminal, which
CTA itself describes as “a display product,” the “functionality made available by the Bloomberg
SAPI is not at its core a display product.” Release 10. This misunderstands how SAPI works.
SAPI enables servers to deliver the same market data for display on the same device that displays
the Bloomberg Terminal. SAPI does not replace the Bloomberg Terminal; to the contrary, a
Bloomberg Terminal subscription is required to use SAPI. From the customer’s perspective, the
6
Bloomberg Terminal and SAPI are intertwined, with SAPI supplying data that subscribers can
use and view only on the same device where they use and view the Bloomberg Terminal.
14. CTA’s Amendment also states that “Bloomberg SAPI permits” non-display use
where the data is not “visibly available to a data recipient on a device” when “Bloomberg SAPI
allows customers to run server-based applications on market data.” Release 10. This is
incorrect. Bloomberg neither “permits” nor “allows” non-display uses for SAPI and, in fact,
affirmatively prohibits those uses. Moreover, from a technical perspective and as described
above, SAPI delivers data exclusively for use in display applications visible on devices running
the Bloomberg Terminal, which CTA recognizes is “a display product.” Id. at 10. Whether an
application is “server-based” or “desktop-based” has no bearing on whether it is a display use.
Those terms simply describe whether the application is installed on a server or on the individual
user’s desktop device. All approved SAPI applications are server-based but are nevertheless
displayed, through a graphical user interface, on an authorized and entitled user’s desktop or
other display device (e.g., tablet or smartphone).
15. CTA is also wrong when it concludes that “[c]ustomers that choose to subscribe
to both the Bloomberg Terminal and the Bloomberg SAPI presumably are doing so because they
are using the data for purposes other than just display of the data.” Release 11. Customers who
purchase SAPI are receiving a service that uses the data solely for the purpose of displaying it on
the devices of individual users, just as with the Bloomberg Terminal.
C. SAPI Data Is Controlled
16. CTA’s amendment indicates that SAPI does not deliver market data “in a
controlled format,” but rather “in a format that enable[s] their customers to integrate the data into
their own systems and software for Non-Display Use.” Release 7. This statement, however,
7
ignores the fact that Bloomberg controls access to and use of SAPI data through multiple
contractual and technological restrictions that require all data a user consumes to be either
displayed on the same device as the Bloomberg Terminal or used to create derived data that is
displayed on the same device as the Bloomberg Terminal.
17. Significant limitations in Bloomberg’s customer contract restrict SAPI data to
only approved display usage.2
a. SAPI customers must subscribe to the Bloomberg Terminal and agree to a
contract governing the type and amount of Bloomberg market data they can
use.
b. Bloomberg’s contract with SAPI customers prohibits the use of SAPI data for
algorithmic trading, black box trading, or other automated non-display
processes.
c. Bloomberg’s SAPI contract also limits data consumption to levels typically
employed for display use rather than non-display or black-box trading
applications.
d. The contract requires Bloomberg’s approval of any third-party server
applications supplied with SAPI data.
e. The contract restricts use of the SAPI product to authorized users and
prohibits these users from sharing market data, or data derived from market
data, with unauthorized users. It also requires customers to provide
documentation to Bloomberg evidencing that they have incorporated
2 For confidentiality reasons, this and other contracts mentioned in this declaration are not attached to the declaration. Should it aid the Commission’s consideration of this motion, Bloomberg is willing to submit the contracts in connection with a request for confidential treatment or other appropriate protection.
8
Bloomberg’s technical restrictions into their system architecture to ensure that
only authorized, entitled users may view SAPI data.
f. The contract gives Bloomberg the right to audit a customer’s use of SAPI data
whenever Bloomberg believes the customer to be in breach of the contract or
if CTA requests an audit.
g. The contract requires SAPI customers to certify every six months that only
authorized users have received data through SAPI. It also requires customers
to make annual certifications that their use of SAPI complies with all
contractual requirements, including the prohibition against black-box use.
18. SAPI customers must also sign a subscriber agreement with NYSE and
potentially other sources of market data. In the case of CTA, its administrator NYSE has a
contractual right to audit the use of SAPI data.
19. Consistent with these contractual limitations, Bloomberg personnel work closely
with customers to ensure their use of SAPI data on display devices remains compliant with the
customers’ obligations. During the implementation process, for example, Bloomberg personnel
share with customers a SAPI Guidelines document that sets forth the nature and limitations of
SAPI use. The Guidelines make clear that the “fundamental rule governing [a customer’s] use of
SAPI data is that the data can be accessed only by a [Bloomberg Terminal user] that has been
permissioned to access that data and who is logged on[to] the Terminal on the same device that
he or she is accessing that data.” It explains that “SAPI data (whether raw or derived) may not
be used as inputs into any non-user-based, non-display application, including but not limited to
any automated algorithmic trading application.” A copy of the SAPI Guidelines document is
attached as Exhibit A.
9
20. When a customer subscribes to SAPI, Bloomberg personnel work closely with the
customer, its information technology staff, its software developers, and its end users to ensure
they understand and properly implement SAPI in light of these controls. This typically involves
spending a significant amount of time with the customer on-site to test and deploy the SAPI
product.
21. Bloomberg personnel also work closely with third-party developers who design
applications for use on display devices with Bloomberg SAPI data. We utilize a vetting form,
development kit, and product review in order to determine whether an application is appropriate
for use with SAPI. Bloomberg publishes a list of approved third-party applications and
individually vets any unlisted third-party applications that a customer wishes to use. Bloomberg
counsels SAPI customers on how to use applications and remain compliant with their technical
limitations and contractual obligations.
22. The contractual limitations on SAPI use set forth above are consistent with
technological limitations designed to prevent the unauthorized or non-display usage of market
data supplied by SAPI.
a. To log into the Bloomberg Terminal, SAPI users must provide biometric
identification. This technology prevents subscribers from logging into the
Bloomberg Terminal on more than one device at a time and ensures that only
authorized users are physically present to view the data delivered by SAPI to a
device.
b. SAPI users must also supply a unique subscription ID to log into the
Bloomberg Terminal, which further ensures that only authorized users are
viewing data supplied by SAPI.
10
c. Bloomberg verifies a user’s biometric and alphanumeric identification through
a centrally controlled entitlement system. The system will permit a user to
view SAPI-supplied data only after it verifies the user’s identity, ensures that
the user is logged into only one device, and confirms that the user is
authorized by Bloomberg to view the requested data.
d. SAPI users’ data consumption is limited to volumes appropriate for use on a
limited number of applications displayed on a device. SAPI technology
monitors the amount of data consumption by SAPI customers. Usage above
contractual limits triggers reports to a product oversight team. Bloomberg
works with customers to bring consumption within authorized limits and, if
those efforts fail within an allotted time, will suspend service.
23. The controls applicable to SAPI generally do not apply to Bloomberg’s
data feed product, B-PIPE. B-PIPE customers can make the data they receive available
to any of their employees, whether or not those employees are Bloomberg Terminal
subscribers. As a result, B-PIPE customers may authorize any number or type of their
employees to use data delivered through B-PIPE. B-PIPE also offers much higher
quantities of data than SAPI does, and, unlike SAPI, the data does not have to be
displayed on a device logged into the Bloomberg Terminal—or even displayed at all. It
can be used for algorithmic trading or other automated processes not requiring human
users.
24. These controls also protect against misuse of Bloomberg’s own proprietary
market data. A great deal of Bloomberg proprietary data is provided through SAPI—all of
which Bloomberg has a vested financial interest in protecting from unauthorized use.
11
25. CTA states that non-display use should be defined according to whether
customers are “able to integrate the data into the recipient’s own systems and software.” Release
7-8. It also states that the “ability to integrate consolidated quotation and last sale information in
a data recipient’s ‘server-based applications’ clearly demonstrates the incongruence between
SIFMA’s description and the Bloomberg SAPI data product’s overall functionality.” Id. at 11.
From a technical perspective, CTA’s description is inconsistent with the way market data is
delivered and used in the industry. Any market data could in theory be integrated in some way
with a customer’s software or system. That is one reason why Bloomberg utilizes extensive
technical, contractual, and training provisions to ensure usage remains consistent with the
customer’s authorization.
26. CTA’s use of the terms “integrate” and “manipulate” to define non-display
and access fees is also highly ambiguous from a technical perspective. For example,
CTA—correctly—excludes Excel use from its definition of non-display use. Release 8.
But it provides no explanation why Excel should be deemed display use, while other
applications are deemed non-display use, based on “integrating” and “manipulating” data
into a customer’s software. From a technical perspective, there is little if any difference
between the “integration” and “manipulation” of data for display through Excel
compared to other display applications CTA proposes to treat as non-display use.
I declare under penalty of perjury under the laws of the United States that the
foregoing is true and correct.
Tony McManus
12
McManus Exhibit A
Server API (SAPI) Guidelines Bloomberg Product Oversight Overview Bloomberg Server API (“SAPI”) is a part of the BLOOMBERG PROFESSIONAL® service (the “Terminal”). It allows Bloomberg Anywhere® users (“BBA Users”) to download the same high quality, timely data they rely on within the Terminal environment for use in server-based, display applications. Use of SAPI data is subject to certain license restrictions as specified in the Bloomberg Agreement and the Server API Customer Agreement (the “Agreements”). This document is designed to summarize these usage restrictions. (This document serves as a guide only. Your company’s Agreements with Bloomberg govern your use of the Terminal and SAPI.) Data Dissemination The fundamental rule governing your company’s use of SAPI data is that the data can be accessed only by a BBA User that has been permissioned to access that data and who is logged on the Terminal on the same device that he or she is accessing that data. This rule applies to both raw data and derived data generated by the BBA User. Each application that the BBA User uses to access SAPI data must be running Bloomberg’s permissioning system (authentication and entitlement checks) to confirm that the above requirements are met. As an exception to this rule, however, Bloomberg allows the BBA User who initially accessed the data or generated derived data to disseminate a ‘Limited Amount’ of the data (or derived data) in the ordinary course of business, such as providing research reports to your company’s clients. This use of a ‘Limited Amount’ of raw and derived data may not be sold, created as part of a regularly scheduled, automated process, nor streamed or broadcasted. Note that BBA Users must comply with all restrictions on use required by providers of exchange data and other third party contributors. Additional consents from these providers may be required for the use and dissemination of data and information. Some common ‘Limited Amount’ examples are:
Three graphs containing Bloomberg data used in a quarterly .pdf research report created by an asset manager and distributed to its advisory clients.
A chart containing Bloomberg data used by a broker-dealer in a research report to its clients.
Automated Data Validation Use of SAPI data for data validation or data verification to improve other data is not permitted. Non-Display Applications SAPI data (whether raw or derived) may not be used as inputs into any non-user-based, non-display application, including but not limited to any automated algorithmic trading application. Data Storage SAPI data (whether raw or derived) may be stored only on authorized servers for re-access only by authorized BBA Users of the data. Reports In order to authorize BBA Users, applications and servers to access SAPI data (whether raw or derived), your company is required to report (biannually in January and July on SAPE <GO>) all such BBA Users, applications and servers.
Conclusion SAPI is a sophisticated tool that supports a wide range of uses. Use of SAPI in an impermissible manner represents a breach of your Agreements with Bloomberg. The Bloomberg Product Oversight team is available to answer questions about use cases and product choice. For additional information, or for any questions, please contact your Bloomberg account manager.
Revised: November 2015
i.e.,
Id.
see
see supra
sensitive, and could not be recovered and restored to its confidential status if and when the fee
increase were eventually invalidated.
35. Finally, the fee increase would also punish the innovation undertaken by
Bloomberg, other data vendors, and many software application developers-all of whom have
improved the financial markets by introducing useful and efficient financial tools. Bloomberg
works on a daily basis with customers and third-party developers to design more efficient and
more valuable ways to use and display market data to investors' advantage. That process has led
to advances by many third-party and proprietary applications made possible by SAPI' s server
based de.5ig11. It is also reflected in the development of SAPI itself, which was part of a broader
technological trend toward installing applications on servers rather than desktops. If the
exchanges, acting jointly and without competition, are able to capture the value added by such
technological advances, the incentives that led to these innovations and efficiencies will diminish
accordingly.
I declare under penalty of perjury under the laws of the United States of America
that the foregoing is true and correct.
Keith Bunnell
12
SAPI ENABLES BLOOMBERG SUBSCRIBERS TO CONSUME BLOOMBERG DATA IN DISPLAY APPLICATIONS
OPPORTUNITY DEMANDS ACTIONFinancial professionals who want to make smarter decisions faster rely on the Bloomberg Professional® service for real-time data, news and analytics. And while this platform offers a wide range of capabilities, users inevitably need to do more.
Specifically, professionals are working with proprietary and third-party display applications for trade and order management, risk, compliance, portfolio management and analytics. But these tools are often fed with different data sources, raising the risk of discrepancies that can derail critical opportunities. Different feeds may also have specialized requirements for reporting, distribution, usage monitoring and metering.
SAPI MAKES DATA ACTIONABLEThe Bloomberg Server API (SAPI) offers a more straightforward approach. With SAPI, firms can feed proprietary and Bloomberg-approved display applications with the same real-time market data, historical data, premium reference data and calculation tools available with the Bloomberg Terminal.
Available exclusively to Bloomberg subscribers, SAPI helps reduce inconsistencies that can complicate workflow when professionals use multiple display applications fed by disparate data sources. SAPI effectively gives all Bloomberg subscribers in the firm a unified view of global markets whether they are managing orders, measuring risk or analyzing portfolios.
And that view remains one of the most trusted in the industry, fueled by high-quality data across asset classes with superior depth and breadth. So firms can not only improve operational efficiency but also potentially reduce costs by eliminating redundant feeds.
FEED DISPLAY APPLICATIONS WITH CONSISTENT DATAExtensive cross-asset coverage• Exchange and market data from global sources• Most contributor data in the industry• Bloomberg premium data• Bloomberg calculated analytics• Time and sales• Market depth• Referential data – options, future chains, index constituents• Historical and intra-day time series data• Real-time streaming data (exchange data and OTC markets)
Open symbology• Provides connectivity across solutions from Bloomberg
and others
Secure, reliable technology• Robust entitlements control• Data usage monitoring and management• Encrypted connection with mutually authenticated
SSL sessions• Can be deployed over the Internet• Offers fail over, load balancing and scalability
REAL-TIME DATA & PLATFORMSAPI
BLOOMBERG ENTERPRISE SOLUTIONS
Bloomberg
BUILD AN EFFICIENT ENTERPRISE
SAPI allows Bloomberg subscribers to consume high-quality content from the Bloomberg Terminal within proprietary and third-party display applications. It runs on existing hardware and is also available as a managed service called SAPI Plus. Connection to Bloomberg is encrypted using a mutually authenticated SSL session.
SAPI PLUSFor firms that are seeking to maximize efficiency while reducing the IT department’s workload, SAPI Plus combines the capabilities of SAPI with the Bloomberg Platform. Offered as a managed service, the Bloomberg Platform can replace some or all of the infrastructure that firms use today for enterprise data distribution. SAPI Plus lets firms offload all the management of infrastructure and SAPI to Bloomberg. We handle all the underlying hardware assets, including upgrades. SAPI Plus also gives firms access to proven Bloomberg solutions for entitlements management and activity monitoring.
ENTERPRISE ADVANTAGESSAPI delivers value to workgroups of Bloomberg users.
Front and middle office users who are Bloomberg subscribers will be able to take the high-quality data they see every day and consume it within the display applications they rely on for daily workflow. Coverage remains exceptional and the Bloomberg network ensures low-latency delivery.
C-suite decision makers will appreciate how feeding multiple display applications with the same data source may create opportunities to consolidate other feeds.
Software Developers and IT Engineers will like that SAPI is available in multiple programming languages (C, C++, .NET (C#, VB.NET), .COM, Java) which makes it easy to integrate with downstream display applications. Users also benefit from the proven resiliency of the Bloomberg network.
Vendor managers can vastly simplify the management of permissions, entitlements and usage reporting.
ENTERPRISE IS EVERYTHINGFinancial firms face new realities: Do more with less. Show your work. Follow stricter rules. These goals don’t fit within traditional boundaries. They involve people, processes and technology from the front, middle and back office. That’s why firms need a partner with enterprise-level expertise and three decades of deep industry experience.
Bloomberg Enterprise Solutions is ready to help.
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BEIJING +86 10 6649 7500
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bloomberg.com/enterprise
TAKE THE NEXT STEP Learn more about how we can help you consume real-time data in display applications. Visit bloomberg.com/enterprise or reach us at [email protected].
Bloomberg’s services are not and shall not be construed as tax, accounting or regulatory advice or sufficient to satisfy any tax, accounting or regulatory requirements. The customer is solely responsible for the selection and use of appropriate parameters, inputs, models, formulas and data for meeting its tax, accounting or regulatory requirements. The data included in these materials are for illustrative purposes only. ©2014 Bloomberg L.P. All rights reserved. S43790068 0614
ABOUT BLOOMBERG Bloomberg connects influential decision makers to a dynamic network of information, people and ideas. Our strength—quickly and accurately delivering data, news and analytics through innovative technology—is at the core of everything we do. With over 15,000 employees in 192 locations, we deliver business and financial information, news and insight around the world.
BLOOMBERG
SERVER API
CLIENT SERVER APPLICATION
Bloomberg User
Bloomberg User
Bloomberg User
i i
•••••• .. .. ..
Bunnell Exhibit
REAL-TIME DATA & PLATFORMB-PIPE
BLOOMBERG ENTERPRISE SOLUTIONS
B-PIPE DELIVERS HIGH-QUALITY, REAL-TIME MARKET DATA TO FUEL THE ENTERPRISE
SUCCESS DEPENDS ON THE QUALITY OF YOUR DATA From the biggest banks to the most elite hedge funds, financial institutions need timely, accurate data to capture opportunity in fast-moving markets. The challenge is keeping pace with exchange-generated, OTC and derived data from thousands of sources, each with its own proprietary format, data model, symbology and reporting requirements.
To bring all of that market data into business-critical applications, firms historically have had to build a multitude of feed handlers, buy racks of hardware, manage the connections and process the data into a usable form. With millions of ticks, it’s a daunting proposition for any firm trying to simplify workflow.
B-PIPE PROVIDES THE DATA YOU NEEDBloomberg B-PIPE provides the most comprehensive real-time data access the market can offer, delivered using the same highly-resilient global private network as the Bloomberg Professional® service. With over 200 real-time exchanges and over 2,500 unique contributed sources over one open API, your enterprise is one entitlement click away from getting the data it needs.
Bloomberg’s consolidated real-time market data feed covers the same asset classes as the Bloomberg Professional service and can be distributed to users and applications across the firms. Decision makers and support teams alike no longer need to explain data inconsistencies found by the front office. With enterprise applications fueled by B-PIPE, front office users will finally get a consistent, accurate view of the global markets.
POWER YOUR FIRM WITH REAL-TIME DATAExtensive Cross-asset Coverage• Exchange and market data from global sources• The most contributed data in the industry• Premium data available to Bloomberg Professional
service users• Bloomberg calculated analytics• Time and sales• Market depth• Referential data: options, future chains,
index constituents
Open Symbology• Provides intermingled products to Bloomberg and
other users
Extensible Normalized Data Model• Standardized or native field formats: — Security status indicators — Trade events — Standardized trade types such as MMT and ESMA
Resilient Ticker Plant & Distribution Infrastructure• Low latency• High reliability
Intuitive and Comprehensive Documentation• Data dictionaries• Exchange profiles
Bloomberg
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
The data included in these materials are for illustrative purposes only. ©2014 Bloomberg L.P. All rights reserved. 57712290 0514
BEIJING +86 10 6649 7500
DUBAI +971 4 364 1000
FRANKFURT +49 69 9204 1210
HONG KONG +852 2977 6000
LONDON +44 20 7330 7500
MUMBAI +91 22 6120 3600
NEW YORK +1 212 318 2000
SAN FRANCISCO +1 415 912 2960
SÃO PAULO +55 11 3048 4500
SINGAPORE +65 6212 1000
SYDNEY +61 2 9777 8600
TOKYO +81 3 3201 8900
bloomberg.com/enterprise
REAL-TIME DATA SIMPLIFIED
TAKE THE NEXT STEP Learn more about how we can help your firm consume high-quality real-time market data. Visit bloomberg.com/enterprise or reach us at [email protected].
B-PIPE CAN NOURISH ANY APPLICATION IN YOUR ENTERPRISEFrom front office to back, Bloomberg Professional user or otherwise, B-PIPE can deliver real-time market data to all of your user applications. Whether it’s a simple P&L task in a spreadsheet or a complex analytics engine run on servers, your user community is covered.
Even in the absence of users, B-PIPE provides its high-quality data to non-display (black box) applications. B-PIPE’s high-quality content can also be delivered via the Bloomberg Data Distribution Platform as a fully managed service or via the third-party platform of your choosing. If you can build it, we can feed it.
B-PIPE IS MANAGED, MONITORED, AND EQUIPPEDUsing the same world class resilient private network as the Bloomberg Professional Service, we monitor B-PIPE 24/7/365. As a fully-managed service, we provide the hardware you need to efficiently utilize the connectivity you have back to Bloomberg. B-PIPE eliminates the burden of buying equipment, managing your connections and performing software upgrades so you can stay focused on mission-critical, alpha-generating activities.
B-PIPE’s high-quality content can be delivered via the Bloomberg Data Distribution Platform as a fully managed service or via the third party platform of your choosing. Potential consumers may include Bloomberg Users, non-Bloomberg users and black box applications.
3rd Party
Application
Bloomberg User
Bloomberg User
Non-Bloomberg
User
Internal Proprietary Application
3rd Party
Application
Algorithmic Trading
Application
Black Box
Bloomberg Distribution Platform 3rd Party Distribution Platform
3rd Party
Application
Bloomberg User
Bloomberg User
Non-Bloomberg
User
Internal Proprietary Application
3rd Party
Application
Algorithmic Trading
Application
Black Box
Bloomberg Data CenterB-PIPE B-PIPE
ENTERPRISE ADVANTAGESB-PIPE delivers value to everyone across the firm.
Front, middle and back office users gain access to world-class data with broad and deep coverage. Connectivity to local ticker plants worldwide ensures low-latency delivery. And everyone sees the same real-time data from the exact same source, so you don’t lose time dealing with discrepancies.
C-suite decision makers will appreciate how a consolidated real-time data feed eliminates the need for redundant platforms, creating potential cost savings.
IT engineers will appreciate consistent performance, proven resiliency, and OPEN API and tools that allow easy integration and onboarding with downstream applications.
Vendor managers can vastly simplify the management of permissions, entitlements and usage reporting.
EXPERIENCE AND TRUSTFinancial firms face new realities: Do more with less. Show your work. Follow stricter rules. These goals don’t fit within traditional boundaries. They involve people, processes and technology from the front, middle and back office. That’s why firms need a partner with enterprise-level expertise and three decades of deep industry experience.
Bloomberg Enterprise Solutions is ready to help.
•• •• •••• .. .. .. ..
Bunnell Exhibit
EIKON SERVER APIPOWERING THE ENTERPRISE AND CONNECTING TO GLOBAL MARKETS
Thomson Reuters Eikon provides easy access to trusted news, data, and analytics,
all filtered by relevance to your exact needs, and displayed in a highly visual way
that is easy to grasp and act on.
From the same intuitive desktop or mobile device, you can instantly connect
to new and emerging markets, deep and varied pools of liquidity, professional
networks and expert support – anywhere, anytime.
With Eikon Server API, professionals that use Eikon alongside their execution
and order management systems on the same desktop have access to the
same real-time market data, historical data, premium reference data through
both platforms.
Our consolidated global data delivers full tick, depth-of-market data; helping
customers to source better quality information. Coverage includes over 40 million
securities and derivatives across every geography and asset class from thousands
of exchange traded and OTC markets and offers derived analytics, proprietary
news, evaluated pricing, reference data, tick history and third-party content.
Eikon Server API is available only to Eikon customers and is designed to
help streamline buy-side workflow. By providing data delivery, desktop and
transactions capabilities all in one package, Thomson Reuters helps companies
reduce costs by eliminating dual exchange fees and provides a complete
customer solution combining the Eikon desktop and a data delivery
mechanism for powering server based applications.
KEY FEATURES • Delivers the same data to desktop OMS/EMS applications running
alongside Eikon (no additional exchange fees)
• Provides access to Thomson Reuters global real time exchange, OTC,
contributed data and news content on both platforms with access to a
combination of level 1 real time exchange data, OTC & contributed data
content, real time analytics (US) and selected reference and analytics fields
• Real time content available to OMS/EMS desktop application matches
Eikon entitlements
• Thomson Reuters remains Vendor of Record
• Available over the Internet to any site globally
• Fully hosted solution with no requirement to deploy infrastructure on
client sites
Eikon Server API allows Eikon subscribers to consume high-quality content from
Thomson Reuters within OMS/EMS applications. It runs on existing hardware
and is encrypted using a mutually authenticated SSL session.
Eikon Server API enables customers to access Thomson Reuters News and Financial Data through Eikon
and third party applications, on the same desktop, with a single data license.
THOMSON REUTERS DATA AVAILABLE News & Commentary
Direct access to the breaking news and commentary
that matters to you. Leveraging the world’s largest
financial news organization, we uncover market-
moving news and deliver it faster than anyone else.
Economic Data
We provide the largest and most comprehensive
collection of global macroeconomic time series
content in the industry, with a clear emphasis on
factors that affect market performance.
Market Data & Pricing Deepen your insight into the global markets with
access to the widest available range of cross-asset
data; the breadth and depth of our reference, real-
time and historical data is second to none.
Company Data
Get the comprehensive, deep and timely
information you need to develop in-depth, bottom-
up analyses. Whether for developed, emerging or
frontier markets, we are the leading provider of
detailed company data.
Reference Data Confidently tap into the most comprehensive
reference data available to investment management
community including end-of-day prices from
180+ exchanges, spot rates on 175 currencies and
corporate actions on over 50,000 companies.
Specialized Data Access valuable additional financial and analytical
data, including quantitative modeling, venture
capital and private equity data, M&A activity and
environmental and social responsibility rankings.
Visit financial.thomsonreuters.com
For more information, contact your representative or visit us online.
© 2015 Thomson Reuters. Thomson Reuters and the Kinesis logo are trademarks
of Thomson Reuters and its affiliated companies. S028213 12/15.
1
UNITED STATES OF AMERICA before the
SECURITIES AND EXCHANGE COMMISSION
In The Matter of: The Application of BLOOMBERG L.P. For Review of Amendments of the Consolidated Tape Association Limiting Access to its Services
Admin. Proc. File No. 3-18316
DECLARATION OF GARY KOTOVETS
I, Gary Kotovets, declare as follows:
1. I submit this declaration in support of Bloomberg L.P.’s Motion to Stay CTA’s
Fee Amendment. I have worked at Bloomberg L.P. (“Bloomberg”) since 2000. Since 2006, I
have served as global head of data management and acquisition. In that role, my responsibilities
include supervising Bloomberg’s relationship with North American stock exchanges with respect
to fees for market data, including real-time market data. I make this declaration based on my
personal knowledge, discussions with colleagues, and Bloomberg’s corporate records.
2. Bloomberg serves as a market data vendor for both top-of-book market data and
depth-of-book data. Top-of-book, or “core,” data consist of last-sale and quotation data that
market participants must provide, free of charge, to a registered securities information processor
(“SIP”), which consolidates and sells the data on an exclusive basis. The Consolidated Tape
Association (“CTA”) is the sole processor and registered SIP for consolidated last-sale and
quotation data for two categories of securities: Network A, which consists of market information
for securities listed on the New York Stock Exchange (“NYSE”), and Network B, which consists
of market information for securities listed on CBOE, NYSE Arca, NYSE American, and other
regional exchanges. NYSE administers Network A and Network B for CTA.
2
3. CTA historically has charged a device fee for devices that display real-time
market data (e.g., computers, tablets, and smartphones), and an access fee for data feeds. In
2014, CTA began also charging separate non-display fees for data that is used for automated
processes without display to users. CTA publishes its data fees in national market system plans,
known as the CTA Plan and CQ Plan, filed for review with the Securities and Exchange
Commission.
4. In November 2017, CTA published an amendment to the CTA and CQ plans,
SEC Release No. 34-82071 (“Amendment” or “Release”). The Amendment purports to “clarify”
the definitions of non-display use, access fee, and data feed. Release 1. It states that Bloomberg
is allowing SAPI subscribers “to use … market data for Non-Display purposes, yet … not
reporting that delivery of data as a data feed.” Id. at 8. Accordingly, the Amendment accuses
Bloomberg of “mischaracterizing” SAPI as a display tool and “tak[ing] advantage of [a]
perceived loophole” in the existing definitions governing non-display and access fees. Id. at 10,
24. SAPI’s classification as a display product rather than a data feed, however, is consistent with
the longstanding agreement between Bloomberg and NYSE (acting on behalf of CTA), and with
NYSE and CTA’s consistent interpretation and treatment of SAPI under that agreement.
A. 2004 Introduction and Classification of SAPI
5. In 2004, when Bloomberg launched SAPI, it entered into an amended agreement
with CTA, acting through NYSE, governing Bloomberg’s use of Network A data. In the
agreement, a document titled “Exhibit A to the Bloomberg-NYSE Agreement for the Receipt and
3
Use of Market Data,” CTA recognized that SAPI is a display product subject to the device fee,
not a data feed subject to the access fee, under the CTA plan.1
6. In contrast to its treatment of SAPI, the agreement stated that the Market Data
Feed known as B-PIPE was the only Bloomberg data product that “provide[s] a data feed or
other type of service where control over the use of Market Data and the reporting of uses and
display devices cannot be directly maintained by the Customer.”
7. The agreement went on to describe SAPI as a real-time display service for
subscribers whose devices and logins entitle them to receive the relevant CTA market data. The
agreement recognized that SAPI subscribers were required to sign agreements with both NYSE
and with Bloomberg limiting the subscribers’ use of the data. And the agreement stated that
SAPI subscribers were permitted to download market data onto authorized servers, run server-
based applications on that market data, and make that data available to authorized internal users.
8. The agreement also described limits on the use of market data by SAPI
subscribers. It stated that “[a]ll data entitlements are centrally controlled” through a server
“compatible with Bloomberg’s central entitlement system, meaning the server enforces end-user
entitlements … [and] ensures that only properly entitled users have access to real-time data.”
9. By letter dated October 22, 2004, NYSE’s Director of Market Data transmitted to
Bloomberg the amended Exhibit A. Consistent with that agreement, NYSE’s letter distinguished
between “display devices and data feeds” and recognized that “Bloomberg’s new Server API
functionality” is part of the “Bloomberg display service.” A copy of NYSE’s letter is attached as
Exhibit E.
1 For confidentiality reasons, this and other contracts mentioned in this declaration are not attached to the declaration. Should it aid the Commission’s consideration of this motion, Bloomberg is willing to submit the contracts in connection with a request for confidential treatment or other appropriate protection.
4
B. 2005 and 2010 Amended Agreements
10. In 2005, Bloomberg and CTA amended Exhibit A again, this time to allow
Bloomberg to use Network B data with SAPI. The 2005 amendment for Network B data was
substantively identical to the 2004 amendment for Network A data described above, and again
embodied CTA’s agreement that SAPI was a display service.
11. By letter dated April 18, 2005, the Market Data Services Account Manager of the
American Stock Exchange (which at that time administered Network B on behalf of CTA, and
which NYSE bought in 2008) sent Bloomberg the amended version of Exhibit A for Network B
data. The letter acknowledged that “[t]here are no additional fees for use of data” with SAPI
because SAPI “is integrated into [Bloomberg’s] current interrogation display services.” A copy
of the letter is attached as Exhibit F.
12. On or around November 14, 2007, Bloomberg and NYSE, acting on behalf of
CTA, entered into a new underlying “Agreement for Receipt and Use of Consolidated Network
A Data and NYSE Market Data.” The agreement incorporated Exhibit A to continue to govern
the receipt and use of market data, leaving intact the agreement that no additional fees apply to
SAPI because it is integrated into Bloomberg’s display services.
13. In 2010, Bloomberg and NYSE, acting on behalf of CTA, amended Exhibit A to
govern both Network A and Network B data in a single document. In this new version of
Exhibit A, Bloomberg and NYSE again agreed that SAPI should be treated the same way it had
been treated under the 2004 and 2005 amendments: as a display service subject to the device fee.
The parties recognized in the 2010 agreement that SAPI is not “a data feed or other type of
service where control over the use of Market Data and the reporting of uses and display devices
cannot be directly maintained by [Bloomberg].” The agreement reiterated that the “only
Bloomberg service that is included in [the data-feed] category is Bloomberg’s B-PIPE Service.”
5
The 2010 version of Exhibit A also restated the 2004 and 2005 versions’ description of SAPI as
subject to the device fee, SAPI’s typical uses, and its entitlements and controls.
C. CTA’s 2013 and 2014 Plan Amendments
14. In 2013, CTA adopted new access fees for Network A and Network B data feeds
as follows:
Access Fees (monthly) Network Output Feed Direct Fees Indirect Fees2
Network A Last Sale $1,250 $750 Bid-Ask $1,750 $1,250
Network B Last Sale $750 $400 Bid-Ask $1,250 $600
15. The new access fees represented increases of between 25 and 78 percent over the
previous access fees for Network A, and between 100 and 212 percent over the previous access
fees for Network B. The 2013 amendment applied access fees only to data feeds.
16. In 2014, CTA again amended the CTA fee schedule to establish fees for “non-
display” uses of market data. The 2014 amendment defined non-display use as “accessing,
processing or consuming real-time Network A or Network B” data, “whether delivered via direct
and/or redistributor data feeds, for a purpose other than in support of a data recipient’s display or
further internal or external redistribution.” 79 FR 60,536, 60,538 (Oct. 7, 2014). The non-
display definition excluded the use of market data “to create and use derived data.” Id. As
discussed below, by imposing increased fees the amendment expressly addressed the
technological change and revenue impact associated with the rise of algorithmic, automated, and
“black box” trading using data delivered to computers by data feeds and not displayed for human
2 Under the 2013 amendment, firms that purchase a data feed from a data vendor such as Bloomberg are subject to an indirect access fee; direct access fees apply to firms that receive data feeds directly from CTA.
6
use. Id. SAPI, by contrast, delivers data for display on a device that also displays the
Bloomberg Terminal for human use.
17. The 2014 amendment established three different categories of non-display use,
corresponding to whether a data recipient makes non-display use of market data on its own
behalf (Category 1), on behalf of its clients (Category 2), or for the purpose of internally
matching buy and sell orders within an organization (Category 3). Data recipients whose use
falls into multiple categories must pay multiple non-display fees. The 2014 amendment adopted
the following non-display fees:
Non-Display Fees (monthly) Network Output Feed Category 1 Category 2 Category 3 Network A Last Sale $2,000 $2,000 $2,000 Network A Bid/Ask $2,000 $2,000 $2,000 Network B Last Sale $1,000 $1,000 $1,000 Network B Bid/Ask $1,000 $1,000 $1,000
18. SAPI delivers data “in support of a data recipient’s display” and is not a data feed.
Accordingly, following the 2014 amendment, Bloomberg (and CTA) continued to treat SAPI as
a display product, subject to device fees. All recipients of Network A securities, including SAPI
customers, paid between $19 and $45 per Terminal user per month for bid/ask and last-sale
information, and all recipients of Network B securities, including SAPI customers, paid $23 per
Terminal user per month for bid/ask and last-sale information.
19. Since CTA promulgated these 2013 and 2014 amendments, I am unaware of any
attempt by CTA to audit Bloomberg’s records regarding the use of CTA market data by SAPI
customers. Nor did CTA cease treating Bloomberg SAPI customers as subject only to the device
fee for display use. It was not until late 2016 and early 2017 that CTA changed its position to
assert that SAPI was a non-display data feed rather than a display product.
7
20. In a comment letter regarding the Amendment currently at issue, dated December
14, 2017, CTA states that “[a]ny discussions prior to 2014 are immaterial.” Despite this
unsupported assertion, the longstanding distinction between display devices and data feeds is
reflected in the contractual and business relationship between CTA and Bloomberg both before
and after the 2014 amendment. For over a decade, CTA recognized that SAPI is not a “data feed
or other type of service where control over the use of Market Data and the reporting of uses and
display devices cannot be directly maintained by [Bloomberg].” CTA now claims the opposite,
even though there has been no weakening of “control” or change in “use” of SAPI, which
remains a display service.
D. CTA’s 2017 Efforts to Amend the Non-Display and Access Fees
21. In mid-September 2016, a CTA representative called a Bloomberg employee who
reports to me to discuss whether SAPI can be used for non-display purposes. I understand that,
during this call, CTA asked for a current description of SAPI.
22. Later that week, on September 22, 2016, CTA contacted Bloomberg via email. In
that email, CTA asked Bloomberg to review the description of SAPI in the 2004 version of
Exhibit A to the Bloomberg-NYSE market-data agreement discussed above in paragraph 5.
CTA asked Bloomberg to confirm whether that description was accurate and asserted that,
“[b]ased on the description, SAPI can be used for non-display.” CTA did not suggest that it was
considering amending the definition of the terms data feed, non-display use, or access fee. A
copy of the email is attached as Exhibit G.
23. On October 5, 2016, Bloomberg emailed CTA an updated description of SAPI,
which reflected tightened controls that Bloomberg had implemented since the product’s
introduction. The updated description read:
8
Server API. Server API subscribers are permitted to download Market Data from Bloomberg onto authorized servers and run server-based applications on the Market Data. From the authorized server, customers may make real-time data available internally only to users whose device or user ID has been entitled by Bloomberg to receive such real-time data. Server API technology ensures that server-based applications can be used only to enable outputs of such applications in a display to users whose device or user ID has been entitled by Bloomberg. For the avoidance of doubt, Server API service shall continue to be considered as an Interrogation Display Service.
A copy of this email is attached as Exhibit H (emphasis added).
24. On October 14, 2016, CTA responded by email without indicating any
disagreement with that description. The message, attached as Exhibit I, thanked Bloomberg and
stated, “we will review.”
25. I understand that Bloomberg next heard from CTA on November 30, 2016, when
its representative emailed that CTA planned to revise its pricing schedule for both Network A
and Network B market data. Attached to CTA’s message was a draft of the revised pricing
schedule, highlighting the planned changes. A copy of this email is attached as Exhibit J.
26. The following day, December 1, 2016, Bloomberg received by email a notice
from NYSE stating that CTA had filed a “no-fee change amendment to the Pricing Schedules
and the Non-Display Policy,” which “clarifie[d]” that the “CTA Device Fee is for display data
use only (data that is visibly available to the data recipient)” and that “any other data use on a
device shall be considered a Datafeed and subject to the Access Fee and any other applicable
fees such as Non-Display Fee.” A copy of the email is attached as Exhibit K.
27. On December 6, 2016, I understand that CTA called Bloomberg regarding CTA’s
pricing amendment and stated that CTA believed the amendment would increase prices for some
SAPI clients. CTA also requested that Bloomberg provide NYSE with a list of SAPI clients.
Bloomberg declined to do so, explaining that because SAPI is a display product, Bloomberg
already reported its users to NYSE as part of the broader class of Bloomberg Terminal accounts.
9
28. NYSE filed a proposed amendment with the Securities and Exchange
Commission, dated March 23, 2017. See SEC Release No. 34-80300. The release did not
mention Bloomberg or SAPI, but was consistent with the revised pricing schedule CTA had
earlier shared with Bloomberg.
29. Bloomberg subsequently received a letter dated March 27, 2017, from Margaret
Sullivan at NYSE. The letter stated that CTA had filed an “immediately effective amendment”
with the SEC purporting to “clarif[y] certain fees relating to Display and Non-Display Use and
when access fees are applicable.” The letter then stated:
Based on your description of Bloomberg’s Serv[er] API functionality (“SAPI”), it does not qualify as a Professional/Internal Device under the Schedule. You describe SAPI as allowing firms to “run server-based applications” and “make real-time data available internally” to users’ devices. Both of these uses imply that SAPI does not make data visibly available to the data recipient; rather, SAPI is an extranet service that provides access to a data feed. Therefore, pursuant to the Schedule, as clarified consistent with the CTA Fee Clarification filed with the SEC, we consider use of SAPI to be Non-Display Use and subject data recipients to the applicable access fees.
A copy of the letter is attached as Exhibit L.
30. In response to Ms. Sullivan’s letter, I understand that Bloomberg sent an email on
April 3, 2017, noting the lack of any follow-up to the October 2016 discussion about SAPI. The
email reiterated that “SAPI is a terminal product by which usage is restricted to display only with
specific technical and contractual controls,” and noted that NYSE had never followed up on the
description to that effect, which Bloomberg had supplied to NYSE in October 2016. A copy of
the email is attached as Exhibit M.
31. CTA responded by email two days later, on April 5. CTA’s email repeated
CTA’s new position that, “[b]ased on Bloomberg’s description of SAPI’s functionality,” SAPI
involves non-display uses and is a data feed, subject to access fees, because it includes uses not
“designed solely to make CTA’s data visibly available to the data recipient on a device.” CTA
then directed Bloomberg to enter a data-feed request for each SAPI customer, report each SAPI
customer as a data-feed customer once NYSE approves the corresponding data-feed request, and
provide NYSE with a list of SAPI clients. A copy of the April 5, 2017 email is attached as
Exhibit N.
32. On April 27, 2017, CTA withdrew its proposed amendment.
33. Despite this series of emails and letters, CTA claimed in its December 14, 2017
comment letter that its "Participants have no pre-conceived expectation about the change in fees
collected, if any, that may result from the Amendment" and that, "[i]f the Bloomberg SAPI
product enables only display uses, then the Bloomberg SAPI product would not be subject to the
non-display use and access fees." These statements are inconsistent with the communications
described above, which reveal that reaching SAPI has been part of CT A's plan from at least
September 2016.
34. In January 2018, Bloomberg received requests from CTA that Bloomberg provide
NYSE with a list of SAPI clients. Bloomberg has not provided a list of its SAPI customers to
NYSE.
I declare under penalty of perjury that the foregoing is true and correct.
Dated: 2/r/1~ -------
Gary Kotovets
10
Kotovets Exhibit E
C'rrcgory Rci~erl
1nrr.ct<>r Marlr.,rtVata
INYSE October 22, 2004
Ms. Elizabeth Cochrane Bloomberg L.P. 499 Park A venue 15th Floor New York, NY 10022
Dear Elizabeth,
i'- ~ Yqrk Stock Exchange, Tnc. r Wall Street J\ :wYork, NY 100115
(( : fe c:
In accordaoce with the provisions of Paragraph 6 of the agreement between and tite New York Stock Exchange, Inc., dated (the "Agreement"), this is to advise that the enclosed Exhii 1it A dated May 13, 2004, which was prepared by your organiz,ation, is acceptable as a replacement tc the Exhibit A presently attached to the Agreement.
Specifically, the document cites BJoomberg's new Server API functionality in the Bloomberg display service. Please be reminded that the Exhibit A will need to be amended in the fun re if any non~trivial changes are made in the underlying sources, uses, services, entitlement procedure :, etc.·
There is no change in Bloomberg's montllly foes, but please be reminded that Bio )mberg is required to report all display devices and data feeds entitled with Network A data.
Please le:t me know if you have any questions.
cc: Q. Gaylord - Milbank (with enclosure)
Kotovets Exhibit F
04/::!::!/05 _u_~_: 5_8_F_A_x_2_1_2 __ 3_0_6_~~-86 __ ------ MARKETJ)AT,~~-- 141002
AMERICAN STOCK EX CHAN GR' Equities Options ETFs Amorican Stock Exchange
86 Trinity Place
April 18, 2005
M$. Elizabeth Cochrane Bloomberg LP 499 Park Avenue, 15111 fl. New York, NY 10022
Dear Ms. Cochrane:
Now York, NY 10006-1872 T 212 3061000
Attached is your approved Exhibit A 1Jpdated by your organization for the receipt of data via SIAC.
We understand that Bloomberg inter ds to distribute data via your Server AP! product in addition to current professional service. There are no a,jditional fees for use of data In this manner and your reporting will not change since your AP! service is inte~r'ilted into your current interrogation display se1vices.
lf you have any questions at all rega ,ding this matter, please do not hesitate to contact me. Thank you for your continued support of the Amex and best of luck on this new endeavor.
Sabrina Payne Account Manager Market Data Services T: F: E:
Kotovets Exhibit G
=====Begin Message=====
Message#: 0
Message Sent: 09/22/2016 14:19:19
From: [email protected]|Eileen Kelly| | |
TO: [email protected]|GADI GOLDRESS|BLOOMBERG/ 120 PARK|9001|30129324
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Subject: Server API
HI Gadi,
I'm following up on the conversation we had earlier this week. Please review the description of your Server
Product offering as descrbied in your Exhibit A. Please confirm that this is an accurate description of the
service. Based on the descritpion, SAPI can be used for non-display.
[cid:[email protected]]
Thanks and Regards,
Eileen Kelly
Strategic Analysis & Market Data
New York Stock Exchange
An IntercontinentalExchange Company (NYSE: ICE)
11 Wall Street, 15th Floor, New York, NY 10005
Tel: + | Fax:
<mailto: >
[cid:[email protected]]
________________________________
This message may contain confidential information and is intended for specific recipients unless explicitly noted
otherwise. If you have reason to believe you are not an intended recipient of this message, please delete it and
notify the sender. This message may not represent the opinion of Intercontinental Exchange, Inc. (ICE), its
subsidiaries or affiliates, and does not constitute a contract or guarantee. Unencrypted electronic mail is not
secure and the recipient of this message is expected to provide safeguards from viruses and pursue alternate
means of communication where privacy or a binding message is desired.
=====End Message=====
Kotovets Exhibit H
=====Begin Message=====
Message#: 0
Message Sent: 10/05/2016 16:23:49
From: |GADI GOLDRESS|BLOOMBERG/ 120 PARK|9001|30129324
TO: |EILEEN.KELLY| | |
Attachment: image001.png
FileID: 57E4275500008EC107E3DBF4.png
Attachment: image002.png
FileID: 57E4275500008EC107E3DC01.png
Subject: Re:Server API
Here is the new definition to use as discussed:Server API. Server API subscribers are permitted to download
Market Data from Bloomberg onto authorized servers and run server-based applications on the Market Data.
From the authorized server, customers may make real-time data available internally only to users whose device
or user ID has been entitled by Bloomberg to receive such real-time data. Server API technology ensures that
server-based applications can be used only to enable outputs of such applications in a display to users whose
device or user ID has been entitled by Bloomberg. For the avoidance of doubt, Server API service shall
continue to be considered as an Interrogation Display Service.
From: At: 09/22/16 14:19:19
To: Gadi Goldress (BLOOMBERG/ 120 PARK)
Subject: Re:Server API
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HI Gadi,
I’m following up on the conversation we had earlier this week. Please review the description of your Server
Product offering as descrbied in your Exhibit A. Please confirm that this is an accurate description of the
service. Based
on the descritpion, SAPI can be used for non-display.
Thanks and Regards,
Eileen Kelly
Strategic Analysis & Market Data
New York Stock Exchange
An IntercontinentalExchange Company (NYSE: ICE)
11 Wall Street, 15th Floor, New York, NY 10005
Tel: + | Fax:
This message may contain confidential information and is intended for specific recipients unless explicitly noted
otherwise. If you have reason to believe you are not an intended recipient of this message, please delete it and
notify the sender. This message
may not represent the opinion of Intercontinental Exchange, Inc. (ICE), its subsidiaries or affiliates, and does
not constitute a contract or guarantee. Unencrypted electronic mail is not secure and the recipient of this
message is expected to provide safeguards
from viruses and pursue alternate means of communication where privacy or a binding message is desired.
=====End Message=====
Kotovets Exhibit I
=====Begin Message=====
Message#: 0
Message Sent: 10/14/2016 13:59:19
From: [email protected]|Eileen Kelly| | |
TO: |GADI GOLDRESS|BLOOMBERG/ 120 PARK|9001|30129324
Attachment: metadata_58011CF700008786012FBC6C.txt
FileID: 580123D60000ACBD07FB7159.txt
Attachment: alt_body.html
FileID: 580123B50000ACBD07FB6C2C.html
Attachment: image001.png
FileID: 580123BD0000ACBD07FB6D5F.png
Attachment: image002.png
FileID: 580123BD0000ACBD07FB6D6D.png
Subject: RE: Re:Server API
Thank you Gadi, we will review.
Thanks and Regards,
Eileen Kelly
Strategic Analysis & Market Data
New York Stock Exchange
An IntercontinentalExchange Company (NYSE: ICE)
11 Wall Street, 15th Floor, New York, NY 10005
Tel: + | Fax:
<mailto: >
[cid:[email protected]]
From: Gadi Goldress (BLOOMBERG/ 120 PARK) [mailto ]
Sent: Wednesday, October 05, 2016 4:24 PM
To: Eileen Kelly
Subject: Re:Server API
WARNING - External email; exercise caution
Here is the new definition to use as discussed:
Server API. Server API subscribers are permitted to download Market Data from Bloomberg onto authorized
servers and run server-based applications on the Market Data. From the authorized server, customers may
make real-time data available internally only to users whose device or user ID has been entitled by Bloomberg
to receive such real-time data. Server API technology ensures that server-based applications can be used only
to enable outputs of such applications in a display to users whose device or user ID has been entitled by
Bloomberg. For the avoidance of doubt, Server API service shall continue to be considered as an Interrogation
Display Service.
From: <mailto > At: 09/22/16 14:19:19
To: Gadi Goldress (BLOOMBERG/ 120 PARK)<mailto:[email protected]>
Subject: Re:Server API
HI Gadi,
I’m following up on the conversation we had earlier this week. Please review the description of your Server
Product offering as descrbied in your Exhibit A. Please confirm that this is an accurate description of the
service. Based on the descritpion, SAPI can be used for non-display.
[cid:[email protected]]
Thanks and Regards,
Eileen Kelly
Strategic Analysis & Market Data
New York Stock Exchange
An IntercontinentalExchange Company (NYSE: ICE)
11 Wall Street, 15th Floor, New York, NY 10005
Tel: + | Fax: 1
<mailto >
[cid:[email protected]]
________________________________
This message may contain confidential information and is intended for specific recipients unless explicitly noted
otherwise. If you have reason to believe you are not an intended recipient of this message, please delete it and
notify the sender. This message may not represent the opinion of Intercontinental Exchange, Inc. (ICE), its
subsidiaries or affiliates, and does not constitute a contract or guarantee. Unencrypted electronic mail is not
secure and the recipient of this message is expected to provide safeguards from viruses and pursue alternate
means of communication where privacy or a binding message is desired.
________________________________
This message may contain confidential information and is intended for specific recipients unless explicitly noted
otherwise. If you have reason to believe you are not an intended recipient of this message, please delete it and
notify the sender. This message may not represent the opinion of Intercontinental Exchange, Inc. (ICE), its
subsidiaries or affiliates, and does not constitute a contract or guarantee. Unencrypted electronic mail is not
secure and the recipient of this message is expected to provide safeguards from viruses and pursue alternate
means of communication where privacy or a binding message is desired.
=====End Message=====
Kotovets Exhibit J
=====Begin Message=====
Message#: 0
Message Sent: 11/30/2016 16:56:26
From: |Eileen Kelly| | |
TO: |GADI GOLDRESS|BLOOMBERG/ 120 PARK|9001|30129324
Attachment: metadata_583F4B0A00003431015D0E16.txt
FileID: 583F52170000F75107FB190F.txt
Attachment: alt_body.html
FileID: 583F52100000F75107FB17CD.html
Attachment: image001.png
FileID: 583F52160000F75107FB18F1.png
Attachment: CTA Network A Pricing.pdf
FileID: 583F4CC80000FBDE07FC0EBA.pdf
Subject: CTA pricing clarification
HI Gadi,
Thanks for your time today. As promised, I'm attaching a copy of the revised pricing schedule for Network A.
The same changes apply to Network B's pricing schedule.
This version has the points highlighted that are changing. These changes have been filed with the SEC.
The pricing documents are posted on the www.CTAPLAN.com website.
Let me know if you have any questions.
Thanks and Regards,
Eileen Kelly
Strategic Analysis & Market Data
New York Stock Exchange
An IntercontinentalExchange Company (NYSE: ICE)
11 Wall Street, 15th Floor, New York, NY 10005
Tel: + | Fax:
<mailto: >
[cid:[email protected]]
________________________________
This message may contain confidential information and is intended for specific recipients unless explicitly noted
otherwise. If you have reason to believe you are not an intended recipient of this message, please delete it and
notify the sender. This message may not represent the opinion of Intercontinental Exchange, Inc. (ICE), its
subsidiaries or affiliates, and does not constitute a contract or guarantee. Unencrypted electronic mail is not
secure and the recipient of this message is expected to provide safeguards from viruses and pursue alternate
means of communication where privacy or a binding message is desired.
=====End Message=====
NETWORK A
ALL FEES ARE MONTHLY FEE EFFECTIVE JANUARY 2015
Access Fees1 Direct Access Fees - LS $1,250.00
Direct Access Fees - BA $1,750.00
Indirect Access Fees - LS $750.00
Indirect Access Fees - BA $1,250.00
Redistribution Fees2, 3 Per Account $1,000.00
Professional Devices (per unit)2, 4 1 – 2 $45.00
3 – 999 $27.00
1,000 – 9,999 $23.00
10,000+ $19.00
Non-Professional Users (per unit)2, 5 Per User $1.00
Per Quote Packet2, 6 Per Quote $0.0075
Broker Dealer Enterprise Cap7, 8 Unlimited dissemination of real-time data by a U.S. registered broker-dealer
$686,400.00
Ticker Display on TV8, 9 Per 1,000 households reached $2.00
Television Ticker Maximum $125,000.00
Non-Display Use Fees10 Category 1 Category 2 Category 3
Last Sale $2,000.00 $2,000.00 $2,000.00
Bid-Ask $2,000.00 $2,000.00 $2,000.00
Multiple Feed Charge11 Bid-Asked $200.00
Last Sale $200.00
Late/Clearly Erroneous Reporting Charges12 Late Fee $2,500.00
CTA Consolidated Tape Association
Notes to Schedule of Charges
1 The access fee applies if:
(i) the data recipient uses the data for non-display; or
(ii) the data recipient receives the data in such a manner that the data can be manipulated and disseminated to one or more devices, display or otherwise, regardless of encryption or instructions from the redistribution vendor regarding who has authorized access to the data.
When access fees are applicable, the redistribution vendor must report a datafeed for that data recipient.
Access to data feeds through an extranet access provider subjects the data feed recipient to direct access charges.
2 Charges include last sale price information and quotation information.
3 The Redistribution Charges apply to any entity that makes last sale information or quotation
information available to any other entity or to any person other than its employees,
irrespective of the means of transmission or access.
4 The Network A Professional Subscriber charge is assessed on each Interrogation Device (“Device”) and/or GUI application that displays data and contains four tiers of Device charges. For purposes of clarification, display data use subject to the Network A Subscriber charge shall mean only data that is visibly available to the data recipient; any other data use on a Device shall be considered Non-Display Use. A Professional Subscriber’s charge is determined by the number of Devices and/or GUI applications that are capable of receiving Network A data. CTA reserves the right to make the sole determination as to whether a Device and/or GUI application is subject to: (i) Professional Device charges, or (ii) Non-Display Use charges. In determining which of the four tiers applies to a Professional Subscriber, the Professional Subscriber may only include within its tier the Devices that its own employees use (“Internal Distribution”). That is, in determining the appropriate tier, a Professional Subscriber may not include within its tier Devices used by (a) persons to whom it distributes data that are not employees of the Professional Subscriber (e.g., independent contractors) or (b) employees of firms to which it distributes data (collectively, “External Distribution”). Rather, if the Professional Subscriber redistributes data to other Professional Subscribers, each such other Professional Subscriber shall determine the tier applicable to it.
For example, if Firm ABC provides data to its own employees and also to the employees of three other firms, Firm ABC shall pay according to the pricing tier that reflects the number of Devices that its own employees use. (That is, Firm ABC’s tier is determined solely according to its Internal Distribution.) Regarding Firm ABC’s External Distribution, each of the three firms to which it redistributes data shall pay according to the pricing tier that reflects the number of Devices that its employees use.
Independent contractors associated with a firm are not considered to be employees of that firm. This means that the firm may not include independent contractors in the count of that firm’s Devices for purposes of determining the applicable pricing tier. Rather, each
independent contractor must determine the tier applicable to it, a tier that would be separate and apart from the tier applicable to the firm with which it is associated.
5 Charges apply to Vendor providing service to Nonprofessional Subscribers.
6 Per-quote-packet charge is an alternative to monthly display charges and applies equally to Professional and Nonprofessional Subscribers. A quote packet includes any data element or all data elements in respect of a single issue. Last, open, high, low, volume, net change, bid, offer, size, and best bid and offer with size are examples of data elements. “IBM” is an example of a single issue. An index value is deemed to be a single-issue data element. For each of Network A and Network B, Vendor may maximize at $1.00 that network’s per-quote-packet charges payable for any month in respect of any customer that qualifies as a Nonprofessional Subscriber, regardless of how many quote-packets the customer may receive during that month.
As the Participant’s form of “Agreement for Receipt and Use of Market Data” permits, the Participants require each data redistributor that wishes to redistribute data on a per-quote basis to periodically audit its quote-metering system. If a redistributor fails to provide NYSE with its audit results on or prior to December 31 of a year in which an audit is required, a late fee of $3,000 applies for each month the audit is past due.
7 An entity that is registered as a broker/dealer under the Securities Exchange Act of 1934 is not required to pay more than the enterprise maximum for any month for the aggregate amount of (a) Network A Device charges for Devices used for its Internal Distribution plus (b) Network A Device and per-quote-packet charges payable in respect of services that it provides to Nonprofessional Subscribers that are brokerage account customers of the broker/dealer. A broker/dealer may not include in the enterprise maximum charges for (y) Devices used through External Distribution and (z) Devices used by independent contractors associated with the broker/dealer. Rather, the Professional Subscriber charges applicable to External Distribution and to independent contractors are payable in addition to the enterprise maximum.
During 2014, the Network A monthly enterprise maximum was $686,400. For each subsequent calendar year, the Network A Participants may, by the affirmative vote of not less than two-thirds of all of the then voting members of CTA, determine to increase the Network A monthly enterprise maximum; provided, however, that no such annual increase shall exceed four percent of the then current enterprise maximum amount.
8 The Participants will post the amount of Network A's applicable monthly Broker-Dealer Enterprise Maximum and Television Ticker Maximum on the website that CTA maintains for the CTA Plan and its amendments.
9 Television broadcast can be through cable, satellite, or traditional means. A $2000 monthly minimum fee applies to Network A television broadcasts.
No entity is required to pay more than the “Television Ticker Maximum” for any calendar month. For months falling in calendar year 2014, the monthly Network A Television Ticker Maximum was $125,000. For each subsequent calendar year, the Network A Participants may increase the monthly Network A Television Ticker Maximum by the percentage increase in the annual composite share volume for the preceding calendar year, subject to a maximum annual increase of five percent. However, for any calendar year, the Network A
Participants may determine to waive the Network A “Annual Increase” for the Network A Television Ticker Maximum.
Prorating is permitted for those who broadcast the data for less than the entire business day, based upon the number of minutes the real-time ticker is displayed, divided by the number of minutes the primary market is open for trading (currently 390 minutes). A Vendor may simulcast over multiple channels and is not charged more than once for recipients that have access to multiple simulcasted channels. Billing amounts are based on the “households-reached” totals that are published periodically in the Nielsen Report. If a Nielsen Report does not provide the requisite information as to a Vendor, the Vendor must provide households-reached information, subject to audit. Households-reached totals published at the end of September are the basis for billing for the following January through June. Households-reached totals published at the end of March are the basis for billing for the following July through December.
10 Non-Display Use refers to accessing, processing or consuming data, regardless of the method of transmission of the data, for a purpose other than in support of the datafeed recipient’s display or further internal or external redistribution; any use of the data that is not designed to make the data visibly available to the data recipient on a device is a Non-Display Use. It does not apply to the creation and use of derived data. CTA reserves the right to make the sole determination as to whether a datafeed recipient’s use constitutes Non-Display Use and the category of such Non-Display Use.
The Participants recognize three categories of Non-Display Use. Category 1 applies when a datafeed recipient’s Non-Display Use is on its own behalf. Category 2 applies when a datafeed recipient’s Non-Display Use is on behalf of its clients. Category 3 applies when a datafeed recipient’s Non-Display Use is for the purpose of internally matching buy and sell orders within an organization. Matching buy and sell orders includes matching customer orders on the data recipient’s own behalf and/or on behalf of its clients. Category 3 includes, but is not limited to, use in trading platform(s), such as exchanges, alternative trading systems (“ATS”), broker crossing networks, broker crossing systems not filed as ATS’s, dark pools, multilateral trading facilities, and systematic internalization systems.
For both Network A and Network B, the Non-Display Use charges apply separately for each of the three categories of Non-Display Use. One, two or three categories of Non-Display Use may apply to one organization. An organization that uses data for Category 3 Non-Display Use must count each platform that uses data on a non-display basis. For example, an organization that uses Network A quotation information for the purposes of operating an ATS and also for operating a broker crossing system not registered as an ATS would be required to pay two Network A quotation information Non-Display Use fees.
11 For both last sale and bid-ask data feeds, this charge applies to each data feed that a data recipient receives in excess of the data recipient’s receipt of one primary data feed and one backup data feed.
12 These charges will be assessed for each month in which there is a failure to provide a network’s required data-usage report to the Network A administrator, commencing with reporting failures lasting more than three months from the date on which the report is first
due. By way of example, if a Network A data-usage report is due on May 31, the charge would commence to apply as of September 1 and would appear on the market data invoice for September. The Network A administrator would assess the charge as of September 1, and would continue to assess the charge each month until the Network A administrator receives the complete and accurate data-usage report.
A report is not considered to have been provided to the Network A administrator if the report is clearly incomplete or inaccurate. This would include, but is not limited to, a report that fails to report all data products and a report for which the reporting party did not make a good faith effort to assure the accuracy of data usage and entitlements.
Kotovets Exhibit K
=====Begin Message=====
Message#: 0
Message Sent: 12/01/2016 15:55:10
From: |Thomas Marro| | |
TO: [email protected]|EBM AMERICAS|BLOOMBERG/ 731 LEX| |
BCC: |GADI GOLDRESS|BLOOMBERG/ 120 PARK|9001|30129324
Attachment: metadata_58408E2E000010F50065681A.txt
FileID: 584094770000F75107FBA70E.txt
Attachment: alt_body.html
FileID: 5840946E0000F75107FBA5C4.html
Attachment: image001.png
FileID: 584094720000F75107FBA66A.png
Subject: CTA fee clarification on the use of CTA Data
[cid:[email protected]]
RE: CTA fee clarification on the use of CTA Data – BLOOMBERG FINANCE L P: 3914200000
Dear GADI GOLDRESS,
The Participants of the Consolidated Tape Association have filed a no-fee change amendment to the Pricing
Schedules and the Non-Display Policy. The amendment clarifies that the CTA Device Fee is for display data
use only (data that is visibly available to the data recipient); any other data use on a device shall be considered
a Datafeed and subject to the Access Fee and any other applicable fees such as Non-Display Fee.
Redistributors that provide CTA Market Data to customers as a Datafeed must submit a data feed request to
NYSE as the Administrator of the Consolidated Tape, and require those customers of such CTA Market Data to
complete an Exhibit A for the data feed request.
Any Redistributors currently reporting a device where the data is leaving the device to be used for Non-Display
or other purposes are required to report that as a data feed. The data recipient will be required to complete an
Exhibit A and will be invoiced applicable Access and Non-Display Use fees.
Additional information can be found below:
· CTA Network A Pricing
Schedule<https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/CTA%20Network%20A%20P
ricing%20-%20Jan%201%202015.pdf>
· CTA Network B Pricing
Schedule<https://www.nyse.com/publicdocs/ctaplan/notifications/trader-update/CTA%20Network%20B%20Pric
ing%20-%20Jan%201%202015.pdf>
· Policy - CTA Non
Display<https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/Policy%20-%20CTA%20Non%
20Display.pdf>
If you have any questions, please contact your NYSE account manager [email protected] .
Regards,
NYSE Market Data
________________________________
This message may contain confidential information and is intended for specific recipients unless explicitly noted
otherwise. If you have reason to believe you are not an intended recipient of this message, please delete it and
notify the sender. This message may not represent the opinion of Intercontinental Exchange, Inc. (ICE), its
subsidiaries or affiliates, and does not constitute a contract or guarantee. Unencrypted electronic mail is not
secure and the recipient of this message is expected to provide safeguards from viruses and pursue alternate
means of communication where privacy or a binding message is desired.
=====End Message=====
Kotovets Exhibit L
I I NYSE
March 27, 2017
Mr. Gadi Goldress Bloomberg LP 120 Park Ave. New York, NY 10165
DearGadi:
Margaret Sullivan Director
New York Stock Exchange 11 Wall Street NYC, NY 10005 212~56-5553
Please be advised that the Consolidated Tape Association ("CTA") filed with the Securities and Exchange Commission an immediately effective amendment to both the CTA Plan and Consolidated Quotation rca") Plan that clarifies certain fees relating to Display and Non-Display Use and when access fees are applicable (the "CT A Fee Clarification") (see Securities Exchange Act Release No. 80300 (March 23, 2017) (File No. SR-CTA/CQ-2017-02)). The amended Fee schedule is available here: CTA Network A Pricing/Rate Schedule; CTA Network B Pricing/Rate Schedule
As described in greater detail in the CTA Fee Clarification, footnote 2 of the CTA Schedule of Market Data Charges (the "Schedule") provides that "display data use subject to the Network A and Network B Subscriber charges shalt mean only data that is visibly available to the data recipient; any other data use on a Device shall be considered Non-Display Use." In addition, footnote 8 of the Schedule specifies that "any use of the Data that is not designed to make the Data visibly available to the Data recipient on a device is a NonDisplay Use." Finally, footnote 10 of the Schedule now provides that the "access fee applies if (i) the data recipient uses the data for non-display; or (ii) the data recipient receives the data in such a manner that the data can be manipulated and disseminated to one or more devices, display or otherwise, regardless of encryption or instructions from the redistribution vendor regarding who has authorized access to the data." The CTA Fee Clarifications, as filed, are applicable to all data recipients and supersede any prior understandings of the operation of the Schedule.
Based on your description of Bloomberg's Service API functionality ("SAPI"), it does not qualify as a Professional/Internal Device under the Schedule. You describe SAPI as allowing firms to "run server-based applications" and "make real-time data available internally" to users• devices. Both of these uses imply that SAPI does not make data visibly available to the data recipient; rather. SAPI is an extranet service that provides access to a data feed. Therefore, pursuant to the Schedule, as clarified consistent with the CTA Fee Clarification filed with the SEC, we consider use of SAPI to be Non-Display Use and subject data recipients to the applicable access fees. Any prior communications regarding SAPI are superseded by the fee clarification.
.
Sin~ Cv\cr::)f '--fir{~~
An lntercont nental Exchange Company
Kotovets Exhibit M
=====Begin Message=====
Message#: 0
Message Sent: 04/03/2017 18:08:18
From: |GADI GOLDRESS|BLOOMBERG/ 120 PARK|9001|30129324
CC: |MARGARET.SULLIVAN| | |
TO: |EILEEN.KELLY| | |
Attachment: Letter to Bloomberg re API service March 27 2017.pdf
FileID: 58D9848900003E3F07FB4B9E.pdf
Attachment: image001.png
FileID: 58D9849F00003E3F07FB4F92.png
Subject: Re:Letter to Bloomberg re: API
Hi Eileen and Peggy,
Hope all is well.
We have reviewed the attached and we're surprised to have been sent this letter re: SAPI without any further
follow-up to our previous discussion. When we last spoke about SAPI in October, I had explained how it
worked and subsequently provided an amended description, of which you agreed to review. As explained, SAPI
is a terminal product by which usage is restricted to display only with specific technical and contractual
controls. We had not heard any follow up or discussion requests following that provided description, aside from
the below email.
Has NYSE informed the street and our mutual clients of a policy change per below?
How does NYSE intend technically to bill a terminal product such fees as outlined?
Thanks
Gadi
----- Original Message -----
From: Eileen Kelly < >
At: 27-Mar-2017 16:54:13
v\:* behavior:url(#default#VML);
o\:* behavior:url(#default#VML);
w\:* behavior:url(#default#VML);
.shape behavior:url(#default#VML);
March 27, 2017
Mr. Gadi Goldress
Bloomberg LP
120 Park Ave.
New York, NY 10165
Dear Gadi:
Please be advised that the Consolidated Tape Association (“CTA”) filed with the Securities and Exchange
Commission an immediately effective amendment to both the
CTA Plan and Consolidated Quotation (“CQ”) Plan that clarifies certain fees relating to Display and
Non-Display Use and when access fees are applicable (the “CTA Fee Clarification”) (see Securities Exchange
Act Release No. 80300 (March 23, 2017) (File No.
SR-CTA/CQ-2017-02)). The amended Fee schedules are available here:
CTA
Network A Pricing/Rate Schedule;
CTA Network B Pricing/Rate Schedule
As described in greater detail in the CTA Fee Clarification, footnote 2 of the CTA Schedule of Market Data
Charges (the “Schedule”) provides that “display data use subject to the Network A and Network B Subscriber
charges shall mean only data that is visibly available to the data recipient; any other data use on a Device shall
be considered Non-Display Use.” In addition, footnote 8 of the Schedule specifies that “any use of the Data
that is not designed to make the
Data visibly available to the Data recipient on a device is a Non-Display Use.” Finally, footnote 10 of the
Schedule now provides that the “access fee applies if (i) the data recipient uses the data for non-display; or (ii)
the data recipient receives the
data in such a manner that the data can be manipulated and disseminated to one or more devices, display or
otherwise, regardless of encryption or instructions from the redistribution vendor regarding who has authorized
access to the data.” The CTA Fee Clarifications,
as filed, are applicable to all data recipients and supersede any prior understandings of the operation of the
Schedule.
Based on your description of Bloomberg’s Service API functionality (“SAPI”), it does not qualify as a
Professional/Internal Device under the Schedule. You describe SAPI as allowing firms to “run server-based
applications” and “make real-time data available internally” to users’ devices. Both of these uses imply
that SAPI does not make data visibly available to the data recipient; rather, SAPI is an extranet service that
provides access to a data feed. Therefore,
pursuant to the Schedule, as clarified consistent with the CTA Fee Clarification filed with the SEC, we
consider use of SAPI to be Non-Display Use and subject data recipients to the applicable access fees. Any
prior communications regarding SAPI are superseded
by the fee clarification.
Sincerely,
Margaret Sullivan (signed copy attached)
Thanks and Regards,
Eileen Kelly
New York Stock Exchange
An IntercontinentalExchange Company (NYSE: ICE)
11 Wall Street, 15th Floor, New York, NY 10005
Tel: +
This message may contain confidential information and is intended for specific recipients unless explicitly noted
otherwise. If you have reason to believe you are not an intended recipient of this message, please delete it and
notify the sender. This message
may not represent the opinion of Intercontinental Exchange, Inc. (ICE), its subsidiaries or affiliates, and does
not constitute a contract or guarantee. Unencrypted electronic mail is not secure and the recipient of this
message is expected to provide safeguards
from viruses and pursue alternate means of communication where privacy or a binding message is desired.
=====End Message=====
Kotovets Exhibit N
=====Begin Message=====
Message#: 0
Message Sent: 04/05/2017 11:49:55
From: |Eileen Kelly| | |
TO: |GADI GOLDRESS|BLOOMBERG/ 120 PARK|9001|30129324
CC: |MARGARET.SULLIVAN| | |
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Subject: Letter to Bloomberg re: API
Dear Gadi,
Thank you for your email. To help clarify a few points, on November 30, 2016, I called you to discuss and
provide you with notice that the CTA had agreed to file a policy clarification regarding Non-display fees, Access
fees and Device fees. I explained to you what the filing would include and specifically mentioned that this
would impact SAPI. You indicated at that point that you did not want to discuss the matter further at that
time but instead would review the filing once it was published in the Federal Register. In addition to that
conversation, the CTA Administrator team informed all our vendors and customers of the clarification when we
filed our new pricing schedules with the SEC on December 1, 2016. (See
Notice<https://www.ctaplan.com/announcements#110000057154>) Given our November 30th conversation I
was waiting until the SEC approved the filing before following up with you individually as to SAPI.
The CTAPLAN.com website was updated on March 28, 2017, and a client notice was distributed, immediately
after the SEC approved the filing, advising all recipients of the SEC approval. (See
Notice)<https://www.ctaplan.com/announcements#110000062630>
SAPI can no longer be approved as a device. Based on Bloomberg's description of SAPI's functionality, it does
not qualify as a Professional/Internal Device under the CTA Fee Schedule. Bloomberg describes SAPI as
allowing subscribers to download market data from Bloomberg and run server-based applications on the market
data and then make the data available to other users who have been entitled by Bloomberg. These are
non-display uses; they are not uses designed solely to make CTA's data visibly available to the data recipient
on a device, and therefore do not qualify for device fees. SAPI is a service that provides access to a data feed.
We therefore consider use of SAPI to be a Non-Display Use which subjects SAPI's data recipients to the
applicable access fees in line with the CTA Fee Schedule, as clarified and approved by the SEC.
To answer your question about how we intend to bill this product: any customer that is receiving a product that
is not for visual display only should be reported as a datafeed. The vendor, Bloomberg in this case, should
enter a datafeed request for each customer and report each customer as a datafeed once NYSE approves the
datafeed request.
As per our various conversations and email I have asked for a list of the SAPI users pursuant to the terms of
Section 11 of the vendor agreement. The list of SAPI users will provide information as to the firms that should
be reported as receiving datafeeds.
I hope you find this helpful.
Thanks and Regards,
Eileen Kelly
New York Stock Exchange
An IntercontinentalExchange Company (NYSE: ICE)
11 Wall Street, 15th Floor, New York, NY 10005
Tel: + 212.656.5812
<mailto >
[cid:[email protected]]
From: Gadi Goldress (BLOOMBERG/ 120 PARK) <[email protected]<mailto:[email protected]>>
Date: Monday, Apr 03, 2017, 6:10 PM
To: Eileen Kelly < <mailto: >>
Cc: Margaret Sullivan < <mailto >>
Subject: Re:Letter to Bloomberg re: API
WARNING - External email; exercise caution
Hi Eileen and Peggy,
Hope all is well.
We have reviewed the attached and we're surprised to have been sent this letter re: SAPI without any further
follow-up to our previous discussion. When we last spoke about SAPI in October, I had explained how it worked
and subsequently provided an amended description, of which you agreed to review. As explained, SAPI is a
terminal product by which usage is restricted to display only with specific technical and contractual controls.
We had not heard any follow up or discussion requests following that provided description, aside from the below
email.
Has NYSE informed the street and our mutual clients of a policy change per below?
How does NYSE intend technically to bill a terminal product such fees as outlined?
Thanks
Gadi
----- Original Message -----
From: Eileen Kelly < mailto >>
At: 27-Mar-2017 16:54:13
March 27, 2017
Mr. Gadi Goldress
Bloomberg LP
120 Park Ave.
New York, NY 10165
Dear Gadi:
Please be advised that the Consolidated Tape Association ("CTA") filed with the Securities and Exchange
Commission an immediately effective amendment to both the CTA Plan and Consolidated Quotation ("CQ")
Plan that clarifies certain fees relating to Display and Non-Display Use and when access fees are applicable
(the "CTA Fee Clarification") (see Securities Exchange Act Release No. 80300 (March 23, 2017) (File No.
SR-CTA/CQ-2017-02)). The amended Fee schedules are available here:
CTA Network A Pricing/Rate
Schedule<https://secure.ice/?https://ctaplan.com/publicdocs/ctaplan/notifications/trader-update/CTA%20Ne
twork%20A%20Pricing%20-%20Jan%201%202015.pdf>; CTA Network B Pricing/Rate
Schedule<https://secure.ice/?https://ctaplan.com/publicdocs/ctaplan/notifications/pricing/trader-update/601
6.pdf>
As described in greater detail in the CTA Fee Clarification, footnote 2 of the CTA Schedule of Market Data
Charges (the "Schedule") provides that "display data use subject to the Network A and Network B Subscriber
charges shall mean only data that is visibly available to the data recipient; any other data use on a Device shall
be considered Non-Display Use." In addition, footnote 8 of the Schedule specifies that "any use of the Data
that is not designed to make the Data visibly available to the Data recipient on a device is a Non-Display Use."
Finally, footnote 10 of the Schedule now provides that the "access fee applies if (i) the data recipient uses the
data for non-display; or (ii) the data recipient receives the data in such a manner that the data can be
manipulated and disseminated to one or more devices, display or otherwise, regardless of encryption or
instructions from the redistribution vendor regarding who has authorized access to the data." The CTA Fee
Clarifications, as filed, are applicable to all data recipients and supersede any prior understandings of the
operation of the Schedule.
Based on your description of Bloomberg's Service API functionality ("SAPI"), it does not qualify as a
Professional/Internal Device under the Schedule. You describe SAPI as allowing firms to "run server-based
applications" and "make real-time data available internally" to users' devices. Both of these uses imply that
SAPI does not make data visibly available to the data recipient; rather, SAPI is an extranet service that
provides access to a data feed. Therefore, pursuant to the Schedule, as clarified consistent with the CTA Fee
Clarification filed with the SEC, we consider use of SAPI to be Non-Display Use and subject data recipients to
the applicable access fees. Any prior communications regarding SAPI are superseded by the fee clarification.
Sincerely,
Margaret Sullivan (signed copy attached)
Thanks and Regards,
Eileen Kelly
New York Stock Exchange
An IntercontinentalExchange Company (NYSE: ICE)
11 Wall Street, 15th Floor, New York, NY 10005
Tel: +
<mailto >
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=====End Message=====